Public Bill Committee

[Mrs. Joan Humble in the Chair]

Clause 44

Modification of approved programme

Question proposed [this day], That the clause stand part of the Bill.

Question again proposed.

Charles Hendry: Welcome to the Chair, Mrs. Humble, for this afternoon’s proceedings.
My concerns about clause 44 and subsequent clauses centre on the extensive power that they will give to the Secretary of State, and I hope that the Minister will shortly be in a position to give us greater clarity on the proposals.
Our principal concern is that companies that will be asked, or will volunteer, to build nuclear power stations will want as much clarity as possible. The clauses give the Secretary of State tremendous powers to alter what is required of those companies. Will the Minister give us information on the possible time scales? Do the clauses relate to programmes before decommissioning starts, or will the power relate to changing the decommissioning programme once it is in place? There could be a major difference in how it is applied.
What if significant extra costs are involved which the decommissioning fund is not initially set up to cover and the programme becomes very expensive? That comes back to the Liberal Democrat amendment proposed this morning. How will those extra costs be factored in when the Secretary of State requires those companies to be involved in the fund? How much notice will the Secretary of State have to give of the changes that are being proposed? If the notice is given while the decommissioning is under way, is there provision whereby he can say, “This must start tomorrow or next week”, or will he expect those arrangements to allow for many years of planning before they come into force?

Malcolm Wicks: Welcome to the Chair for this afternoon’s sitting, Mrs. Humble.
With your permission, Mrs. Humble, I would like to correct for the record a response that I made this morning, as it might be helpful to the Committee. In answer to the hon. Member for Cheltenham, I explained that the Paris convention, to which the UK is a signatory, sets out a financial limit for operator liability in the event of a nuclear incident above which public funds may be used to meet third-party liability. I should have referred to the fact that the convention, not EU law, sets a minimum level rather than a limit. That was my error.
Under the Paris convention, the usual limit is currently 15 million special drawing rights, which is about £12 million. The UK has gone further than that; we have chosen to exceed the normal maximum limit per incident in our implementing legislation by setting the normal level at £140 million.
The Government are currently analysing options for nuclear operators to obtain financial security for new heads of damages set out in the amending protocol to the Paris convention. We intend to publish a consultation document on the amended convention later this year. I apologise to the Committee for getting that wrong. Nevertheless, I hope that what I have said further satisfies the Liberal Democrats in relation to taxpayer protection.
The hon. Member for Wealden raised the issue of what we mean by “unreasonable delay”. Again, I would like to be as helpful as I can in answering, but I cannot be arithmetically precise. First, the time involved in considering the proposal will depend on its quality and complexity. If it is of a lower quality, we will understandably wish to seek clarity, which will necessarily involve additional time. If the proposed programme involves complex financial arrangements, for example, that will also be likely to involve a longer period of consideration.
Secondly, there are statutory procedures that we must follow, such as consulting the Health and Safety Executive and the Environment Agency, or its equivalent in Northern Ireland. In addition, we would expect to consult the new board, which might also need to obtain expert advice. Thirdly, if the Secretary of State was minded to require a modification, he must give the operator and others with obligations under the programme an opportunity to make written representations.
To try to give a more precise answer to the hon. Gentleman, we might be talking about three to six months for the straightforward cases. For more complex cases, it could take a month or two more than that estimate. Estimates will necessarily be linked to the particular case under consideration. However, it is in no one’s interest for that process to be either rushed, or unnecessarily or unreasonably delayed.
The hon. Gentleman also asked whether the Secretary of State’s power unilaterally to modify an approved programme might create uncertainty for the operator. When the Secretary of State approves a programme, he does so to ensure that prudent provision has been made for the technical matters and for the financing of designated technical matters. Where he approves a programme, the Secretary of State is saying that it meets this requirement and that it adequately addresses the matters set out in the guidance, currently out to consultation, to be issued under clause 50.
It is important that the Secretary of State retains the power to modify an approved programme because it is an important part of the enforcement regime. In such circumstances, the Secretary of State might exercise the power to modify or impose an obligation to ensure that the necessary actions were carried out to bring the programme back into line with the approved programme. He might impose obligations to ensure that the breach did not occur again. It also enables him to respond to changes in circumstances such as a change of control of the operator, as set out in more detail in the funding guidance as part of the funded decommissioning programme guidance consultation currently under way.
The Secretary of State might make a modification or impose an obligation where it is felt that the programme no longer meets the principles set out in guidance, or perhaps where the robustness of an associate body’s provision for financial security is reduced. That would be one answer to that question.
The procedure for making a modification is set out in clause 45 and, for example, we must consult the interested bodies before making a notification. Ideally, we would work with the operator to make a modification. However, in a quick change in circumstances, such as when there is a change in the control of the operator, the modification might have to be very quick indeed. The hon. Gentleman will understand that I cannot be precise, but I hope that is a helpful answer.

Question put and agreed to.

Clause 44 ordered to stand part of the Bill.

Clause 45

Procedure for modifying approved programme

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: The clause sets the procedure for modifying an approved programme whether the modification is proposed by the Secretary of State or by other parties such as the operator. It sets out who should be informed of the proposed modifications, ensures that the Secretary of State is informed in writing of any proposed modification, if not made by him, and approves all modifications.
It is important to have the ability to modify a programme once it has been approved. The power will provide the necessary flexibility for approved programmes to take account of the kind of changes I mentioned in relation to clause 44. Requiring the Secretary of State’s approval to any modification will ensure appropriate oversight of operators’ programmes.
Regardless of who puts forward the proposal, the clause allows for any costs associated with the consideration of the proposed modification to be passed on to the operator. These costs might arise from seeking verification of the impact of the proposed modification on, for example, the cost of managing waste. We will set out in regulations how the charges will be calculated and when they will be payable.
There is a duty on the Secretary of State to give the operator, any other person with obligations under the programme and any person on whom the proposed modification will have an impact the opportunity to make written representations. That will mean that all those who have or will have obligations as a result of the modification will be given a chance to express their views on the impact the proposal might have on their activities. He will also need to take into account those representations, of course.

Anne Main: Will the Minister clarify something? Will there be a right of appeal against decisions that were made despite representations?

Malcolm Wicks: I hope to cover that important question in due course.
When deciding whether a modification is to be made, this clause, like clause 41, requires that the Secretary of State must exercise his power only with the aim of securing that prudent provision is being made for the technical matters, the financing of the designated technical matters and the cost estimates of those matters.
If the Secretary of State proposes to make a modification, he will have to determine that the programme originally submitted no longer makes prudent provision for those matters. In determining that, the Secretary of State will make reference to the guidance in force. Additionally, the Secretary of State will take into consideration comments made by the interested parties.
On the appeals procedure, as is the case with all issues across Government where the Secretary of State has the power to make the final decision, disputes between the operator and the Secretary of State can be settled by recourse to administrative law procedures. Therefore, an appeals procedure is not necessary. I am advised that that is also consistent with analogous legislation such as the Nuclear Installations Act 1965 and also in terms of legislation for offshore renewables.

Question put and agreed to.

Clause 45 ordered to stand part of the Bill.

Clause 46

Power to disapply section 45

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: The Secretary of State can make regulations so that the procedure set out in the clause does not apply to certain modifications. Regulations made under the clause could set a material financial threshold for operational and technical changes in terms of their impact on decommissioning and waste management cost estimates, so that any changes below that level—or, indeed, any cumulative changes over a certain period—would not need the Secretary of State’s approval.
The tiered approach is consistent with that of the Health and Safety Executive and its enforcement of safety standards under licence condition 22 of the nuclear site licence. This power is important because it allows the operator to concentrate on running the station without having to seek approval for modifications which, for example, do not impact significantly on the costs of waste and decommissioning.
To ensure that the clause does not have negative implications for health, safety or environmental matters, the Secretary of State is required to consult interested bodies prior to making the regulations. Regulations made under the clause will also set out how the operator is to inform the Secretary of State of such modifications. That will ensure that the Secretary of State is made aware of any changes to an approved programme, even if he does not have to approve them. The Secretary of State has other powers in the Bill and the programme to obtain information about such changes.

Steve Webb: I have just a brief question in response to the Minister’s comments. We are in the strange situation of deciding that although clause 45 has decent provisions and sets out how things should be done, clause 46 states that the Secretary of State does not have to do any of that if he does not want to.
When I first read that, I imagined that it was an emergency provision—something changes which means that it is important that the funded decommissioning plan is suddenly changed. I can understand why we would then disapply the careful safeguards set out in the previous clause, but the Secretary of State—I mean the Minister; I am getting ahead of myself—is saying the opposite, in that the proposal is de minimis and these are piddling, if I may use that word, little changes. He says that the Government do not want big paraphernalia because they are only changing small things, but that is not remotely apparent from reading clause 46.
My hon. Friend the Member for Cheltenham will try to catch your eye, Mrs. Humble, to raise slightly separate issues, but my worry is that the proposal is so vague and all-embracing that, essentially, we have agreed a set of procedures that seemed reasonable in clause 45, but we are now giving the Secretary of State carte blanch to rip them all up—albeit after consultation—on unspecified grounds which may be specified later. It seems so sweeping. Will the Minister reflect on whether the power is too broad and will rip up what we have just agreed to? The clause might say that it is to be used only in cases in which the regulatory burden of applying clause 45 is excessive and so on, but we do not even have any clues on that. I think that clause 46 is far too broadly drawn.

Brian Binley: May I say what a pleasure it is to see you in the Chair, Mrs. Humble?
I want to raise a question which I asked earlier on consultation. I am equally concerned about the rather broad terms of the clause and that changes might be made that would have an impact on the local population almost without it knowing about them. Will the Minister describe the changes that could occur and give us an inkling about their size? Does he think that there might be a need to consider consulting on the matter, in the way that he promised earlier?

Martin Horwood: May I say how nice it is to be serving under your chairmanship again, Mrs. Humble?
We discussed a number of amendments under clause 42 this morning, one of which we will later press to a vote. We will not press amendment No. 42, but it seems appropriate to refer to it in the context of this clause. It is about the right to consultation of the nuclear liabilities financing assurance board and whether that body will be consulted or informed when changes are made. The Health and Safety Executive, the Environment Agency and others are listed and will be consulted by the Secretary of State. However, the very body that is supposed to deal with the financial arrangements of a funded decommissioning programme will apparently not be consulted because it is not specified.
How will the NLFAB carry out its functions if under subsection (3) modifications can be made by reference to the financial consequences of a decommissioning programme and yet there is no provision for the involvement of the very body that is supposed to exercise scrutiny over this matter? According to the White Paper, the NLFAB is supposed to provide advice to the Secretary of State on the regular reviews and ongoing scrutiny of funding arrangements. How will it do so if it will not even be informed when modifications to funded decommissioning programmes on the basis of financial consequences take place? Perhaps the Minister will clarify how that process will work in practice.

Malcolm Wicks: The hon. Member for Northavon was worried about the implications of a get-out clause. I am not sure if that was his phrase, but some might put it like that. I reassure him that we will lay out in regulations by negative procedure the circumstances in which the modification procedure under clause 45 will not apply. I will give him more reassurance on that matter later if I can. It will be debatable in the House, if appropriate, and we will look at the implications of it in regulations, taking into account his concerns.
The hon. Member for Northampton, South talked about the local community and the local authority in an earlier discussion. I think that that is more or less within the same family of questions. I said this morning that I would look at the matter and come back to the Committee. I do not think that either hon. Gentleman is saying that the local authority should have a role over the financial arrangements or the actuarial issues regarding the fund. They are concerned that there could be a change to the environment, for example because of a new building, or some traffic implications, and want to know whether the local authority should have a role. I am taking advice to see whether such things are covered under existing planning law, but I do not think that I will receive it today. If it is not covered, I will find out whether there needs to be further action and will come back to the hon. Gentlemen.
We discussed the nature of the board this morning and talked about what it is and what it is not. It will give regular advice to the Secretary of State. We do not feel that it needs the powers that the hon. Member for Cheltenham is prescribing because it will be there as part of government—with a small “g”—to advise us. I see no danger that we will not be able to benefit from its advice. I do not think that what he is proposing is necessary.

Martin Horwood: According to the White Paper, the purpose of the nuclear liabilities financing assurance board is not simply to give advice but to provide scrutiny, specifically with respect to the financial arrangements. However, the clause is about changes to funded decommissioning programmes, with specific reference to their financial consequences, and yet there seems to be no mechanism or expressed intention to involve the scrutiny body that we are just about to set up in changes to the funded decommissioning programmes as they happen. Surely that is an essential prerequisite. Indeed, it would be useful to know what kind of financial consequences the Government have in mind in subsection (3). I would be grateful if the Minister could reassure me that the body will be involved in these processes.

Malcolm Wicks: The smaller—de minimis—changes will be set out in the annual report that the operator will have to submit as part of the programme. That is part of the transparency—or scrutiny—process. The Secretary of State has powers in the Bill to obtain more information if he is not satisfied with the changes that the operator has made. There will be transparency about these changes and the board will therefore be able to hear about them and give us advice on that if there is a concern.

Steve Webb: I wonder whether the Minister can help me. I sense that what is going on here is an example of his Department’s legislative approach, which is to say, the things that one might not have thought of are in the clause but he has excluded the blindingly obvious. Is that what is going on here?

Malcolm Wicks: I would not put it quite like that. We are setting up the board to advise us. We are looking at the annual reports and if it wants to advise us on these things or if we want to take its advice, we will. I do not think that the whole chronology of every day in my Department and its interactions with a range of bodies needs to be in every Bill that we introduce. In terms of what size we mean by de minimis, we will be consulting on this level before making our regulations.

Question put and agreed to.

Clause 46 ordered to stand part of the Bill.

Clause 47

Time when modification takes effect

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: This clause sets out the time when a modification to a programme takes effect. In the clause, the time when the modification will take effect is defined as the “relevant time”—[Interruption.] The hon. Member for Wealden can tell that I write all my own speeches. It is important, technically, that I spell this out at this relevant time.
This is the date that is specified in the notice issued by the Secretary of State that confirms his decision to make the modification. Once the “relevant time” specified in the notice has passed, the modification takes effect as if it had been part of the programme that had originally been submitted for approval under clause 42. This means that from the “relevant time” onwards the clauses in this chapter apply to the programme as modified.
The clause will also ensure that an operator does not fall foul of the requirement to comply with an approved decommissioning programme as set out in clause 53. Clause 47(4) ensures that the Secretary of State cannot stipulate a date which is earlier than the date on which the notice is given. This means that he cannot set a date for the modification to be required to take effect before the operator had notice of it. However, this does not prevent the Secretary of State from imposing a modification in a very short time scale. This mirrors the process used, for example, by the HSE where, in extremis, it can issue a direction to make a modification to the station on the grounds of health and safety.

Question put and agreed to.

Clause 47 ordered to stand part of the Bill.

Clause 48

Provision of information and documents

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: Clause 48 enables the Secretary of State to require by notice in writing, information and documentation from the operator and other persons—including associated companies—who already have or will have obligations under a programme once a programme, modification or condition comes into effect.
When making the request, the Secretary of State must specify when the information and documentation is to be made available and the manner in which it is to be provided. This is to ensure that the information is provided in a useable and timely manner. The request for information is limited to two circumstances. The first instance is referred to as Condition A. This applies where the information is necessary for the purpose of the Secretary of State deciding whether or not to approve a funded decommissioning programme submitted by an operator for approval.
The second instance, which can be found in subsection (3), is referred to as Condition—

Steve Webb: B.

Malcolm Wicks: I thank the hon. Gentleman. Condition B applies where the information is necessary to the Secretary of State for the purpose of deciding whether to make a proposed modification or impose an obligation that is subject to clause 44 and the full modification procedure under clause 45. If condition B applies, the Secretary of State can request the information or documentation from any of those persons who would have an obligation under the programme if the modification were to be made. If an operator fails to comply with a request for information, the Secretary of State can make an application to the High Court for an order. If the order is granted, it may require the person to take such steps as the High Court may direct in order to comply with the Secretary of State’s notice. If the person failed to comply with the court order, the normal penalties for contempt of court would apply.

Charles Hendry: This seems a sensible clause generally, but surely the Secretary of State has an automatic right to request information in any circumstances. If the companies from which he has requested information choose not to provide it, they must accept that they have chosen not to have their views taken into account. I am not quite certain why the provision is necessary, because it seems almost superfluous.
Will the Minister also tell us whether the information, once it has been provided, will be made public? Will it be there for all to see or will it be provided simply to him and his Department? How does the Freedom of Information Act 2000 relate to information provided in this way?

Malcolm Wicks: The hon. Gentleman asks two important technical questions. Will he agree to my returning to them in a short while, so that I can be absolutely exact in my answers to him?

Charles Hendry: While I am thinking about it, the Minister is getting inspiration. It seems rather strange to ask us to approve a clause when he has not been able to answer the questions on it. I hope that now that he has received enlightenment, he will share it with the Committee.

Malcolm Wicks: I was mindful that we might be occupied elsewhere in a few moments. I think that the hon. Gentleman is asking what the Secretary of State can do with the information. Can it be made public? Is it made available to others in the group? It is not our intention to release the information, as most of it is likely to be commercial in confidence. This is one of the difficulties that we are grappling with in these situations. Let us always remember that we are talking about private companies and that there will be competition between those companies. Issues about commercial confidentiality are therefore very important. However, information will, of course, be subject to normal freedom-of-information procedures. On the other issue, I will need to return to the hon. Gentleman as soon as I can.

Question put and agreed to.

Clause 48 ordered to stand part of the Bill.

Clause 49

Power to review operation of programme

Martin Horwood: I beg to move amendment No. 46, in clause 49, page 42, line 7, after ‘may’, insert
‘at any time and at least once every five years’.
The Minister has already acknowledged some of the difficulties facing funded decommissioning programmes. We have discussed the possible variability in the costs. Under the previous few clauses, we have discussed the necessity of modifications and how those are likely to take place. We have talked about the changing circumstances that might apply, which might even change the foundation on which some of the funded decommissioning programmes were established. They might change the whole nature of the companies with which the programmes had been established. Some might be facing liquidation or merger and there might be fundamental changes in the financial and commercial arrangements underpinning these arrangements.
We talked much earlier about the importance of establishing the whole fund for decommissioning and any risk premiums having been paid, before the operation of new power stations even begins, so it is very likely that the circumstances surrounding funded decommissioning programmes will change. I think that we all agree with the clause that it will be necessary to review regularly the funded decommissioning programmes, but all Governments tend to put off awkward considerations and awkward reviews if they possibly can.

Sitting suspended for a Division in the House.

On resuming—

Martin Horwood: As I was saying, all Governments are inclined to dodge difficult debates and questions sometimes, as is the case with referendums and the updating of council tax valuations. In the fullness of time, the Secretary of State might not exactly rush to the Dispatch Box to explain how things are getting along if funded decommissioning programmes become somewhat controversial and Members, perhaps from my party, suggest that the programmes are not working as well as they might— that is pretty likely, given the history of the nuclear industry.
The Minister’s adviser, Dr. Higson, suggested in evidence that there would be a specific time period. Replying to me, he said:
“there is provision for that in the Bill through regular monitoring and quinquennial reviews”.——[Official Report, Energy Public Bill Committee, 19 February 2008; c. 116, Q228.]
That was an eloquent way of saying that we should have a review every five years, but I have struggled to find that in the Bill. Amendment No. 46 specifically states that that may occur
“at any time and at least once every five years”.
We are therefore hoping to hold the Government to their stated promise to review funded decommissioning programmes every five years, and that seems to us to be the least that will be required.

Malcolm Wicks: Before I turn to the amendment, perhaps I could give a late answer to the question asked by the hon. Member for Wealden. Essentially, he was asking why we needed to request information. The answer is that the Secretary of State’s powers to refuse to approve a proposed funded decommissioning programme would act as a strong incentive for any operator to provide information on request. However, where the Secretary of State is considering a modification and does not have information to help him to decide, this same strong incentive would not exist. Such a power, therefore, ensures that the Secretary of State can get the information that he requires. I apologise to the hon. Gentleman for not answering in a more timely way.

Charles Hendry: I am grateful to the Minister for that. It was not a particularly important point of principle, but it happens quite often that the Minister feels he needs to write to us or to come back on a subsequent clause to give an answer that relates to a clause that we have gone past. I wonder whether I may ask for guidance from the Chair? May we ask for a suspension of the Committee when it is not possible to get an answer to the questions that we have raised so that the Minister can get the briefing that he requires and we can make a proper informed decision on each clause? We will be reluctant to vote against a clause simply because we do not have the information available. We wish to make a considered decision if we are going to vote against a clause, but in order to support it we often need information that is not forthcoming until later.

Joan Humble: I advise the Committee that it is not normal to suspend a Committee in order for the Minister to obtain information. The Committee ordinarily proceeds to discuss and vote on each clause.

Malcolm Wicks: I can understand the hon. Gentleman’s frustration, but I hope that he will understand the practicalities. From time to time a member of a Committee will ask a perfectly reasonable but also detailed, technical question and it is not always possible, either off the top of one’s head or from a glance at a note, to give a detailed answer. It is one of the difficulties of our Committee system. Given that what we say in Committee can be cited later, we need to be as correct as possible, so rather than answer in a broad brush way, I choose sometimes to say that I will deal with a question in another way. It is also why, when I do occasionally get things wrong, I try to correct the record as soon as I can.
Dr. Stephen Ladyman (South Thanet) (Lab) rose—

Malcolm Wicks: It is part of the frustrations of Committee sittings. A seasoned veteran will now say why he understands my predicament.

Stephen Ladyman: I was just going to defend my hon. Friend. One of the reasons why we have Report stage is so that the Opposition can return to a matter later if necessary.

Malcolm Wicks: Now to the amendment, which raises the important issue of reviewing a funded decommissioning programme. The purpose of clause 49 is to allow the Secretary of State to acquire information at any time from the operator on the operation of the programme and the ability of the programme to meet the operator’s future liabilities. Given the power contained within clause 49 and what we have said in the draft guidance about our intention to review programmes, the amendment does not add anything further to the Secretary of State’s powers. Therefore, we feel that the amendment is unnecessary.
We have stated in the draft guidance that the operator will be expected to carry out both annual and quinquennial—as the Committee now knows, this means every five years—reviews of the programme. Reports of such reviews should be submitted to the Secretary of State. Under the guidance, the persons responsible for managing the independent fund will also have to report to the Secretary of State on an annual and quinquennial basis. Therefore, the amendment would duplicate this requirement.
We would expect the annual reports to set up those changes that have occurred during the year and have an impact on the operator’s liabilities. The size and performance of the fund should also be reported on. The reviews that take place every five years will ensure that the cost estimates of the operator’s liabilities remain accurate and up to date and that the funding arrangements remain capable of yielding sufficient funds to meet the operator’s liabilities. We believe that that approach fits with the Government’s intention to create a principles-based framework in which the Government set the parameters for the operator to work within. By placing that type of prescription in the Bill, we would be directly undermining our principles-based approach. I am confident that setting out our approach for monitoring and reviewing programmes in guidance is the right way ahead.
For the programme to be approved at the outset, the Secretary of State will need to be satisfied that the reporting structure proposed by the operator is acceptable. Once approved, should the operator fail to comply with the reporting requirements agreed with the Secretary of State, it will have failed to comply with the approved programme, and proposed sanctions under this chapter of the Bill will apply. I therefore ask the hon. Gentleman to consider withdrawing his amendment.

Martin Horwood: On balance, I would rather have it in the Bill than in draft guidance, but the Minister has made it very clear that he is giving an assurance that these reviews will happen every five years. I know that he is a man of his word, so I am happy to trust it to him and hope that his heirs and successors are similarly committed to five-year reviews. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Malcolm Wicks: I beg to move amendment No. 27, in clause 49, page 42, line 18, leave out ‘the Secretary of State determines’ and insert
‘the Secretary of State has reason to believe’.
This is an amendment that I can accept because it is a Government amendment. The Government have laid this technical amendment. I hope that, by setting out what clause 49 proposes, I can explain to hon. Members why the amendment is necessary and why the Committee should accept its inclusion in the Bill. Clause 49 allows the Secretary of State to require information to allow him to review an approved programme. The clause allows the Secretary of State to issue a notice in writing to obtain information for the express purpose of determining whether a programme is being complied with, whether it will be possible for future obligations to be complied with and whether the programme makes prudent provision for technical matters and certain designated technical matters. Where the Secretary of State decides, on the basis of the information submitted as a result of the notice issued by him, that the programme is not being complied with, that it will not be possible for future obligations to be met or that the programme no longer makes prudent provision for technical and certain designated technical matters, then the clause allows the Secretary of State to require further information from the operator, persons with obligations under the programme or any associated body.
The further information will help him to decide whether to modify the programme. Where an operator fails to comply with an initial notice from the Secretary of State requiring information or with a subsequent follow-up notice, the Secretary of State can make an application to the High Court for an order. Further detail on the content of reviews by the Secretary of State and the information that the operator will submit is set out in the draft guidance.
I shall now, if I may, turn to the technical amendment that I have tabled to this clause. The amendment adjusts the threshold that the Secretary of State needs to reach for him to require additional information by issuing a second notice. The Bill uses the word “determines” and we consider that it sets a higher threshold than we think appropriate. Without the amendment, the Government believe that the Secretary of State would be inappropriately constrained in his powers to require information, since he would have to be more or less certain that a modification needed to be made, in which case he would not need to obtain further information under the following provisions.
It therefore makes sense to reduce the “determines” threshold to one in which the Secretary of State has “reason to believe”. That will make it easier to request further information, helping to ensure that the Secretary of State has the necessary information that he needs to decide whether to propose a modification, thereby ensuring that the programme continues to make prudent provision for the relevant matters. The amendment strengthens the regulatory framework, improving the Secretary of State’s ability to make informed decisions on modifications. I duly ask hon. Members to consider accepting this technical amendment.

Charles Hendry: I hope that the Minister will let us into the secret of how he manages to get all of his amendments accepted by the Committee, but somehow none of ours are. Maybe there will be some clarification in due course and we will manage to persuade him to see the error of his ways and accept some of the ideas that we are putting forward. I shall be grateful if the Minister can give us a legal definition of “has reason to believe”. It seems to be a very vague phrase. Clearly, we do not want to set the threshold too high for the Secretary of State to be allowed clarification on a situation, but this is very woolly indeed. Would it be one letter that might give him reason to believe? Would it be one Westminster Hall debate that might set off that investigation, one article in the media, or whatever? The Minister does need to give us greater clarity for what he has in mind, because he is asking us to accept this and on the face of it, we are willing to do so, but some greater clarity is required.
There does also seem to be a general point, that the Government rather like woolly phrases. I think that is bad law. People should not have to take test cases to find out exactly what the law means. The more detail there can be in the Bill, so that people know if they are complying with the law—the spirit of the law—the better. I hope that the Minister will take that away and try to make sure that we do not have woolly phrases in future.

Martin Horwood: I would like to offer some support to the Minister on this amendment. Given the concerns about secrecy in the nuclear industry, as well as fears about cost overruns and the adequacy of these funded decommissioning programmes, it seems to me that, very far from not setting the threshold too high, we should set it as low as possible in requiring information from site operators. It is clearly difficult for the Secretary of State, in the words in the clause, actually to “determine” that a programme is not being complied with. One imagines the Minister being some kind of detective. It would be rather more easy for him simply “to have reason to believe”. The hon. Member for Wealden seems unduly worried—all that we are asking for is a lower threshold for the release of information, it is not some great imposition on the site operators or some great breach of commercial confidentiality. It seems to me that that threshold should be as low as possible to allow the Government maximum flexibility in holding these site operators to account and making sure that no subsidy means no subsidy.

Malcolm Wicks: Yes, I think it has a common-sense meaning—my Liberal Democrat colleague has helped me out. In other words, I do not think that the Secretary of State needs to be absolutely certain that there is an issue—evidence may have been brought to him, concerns may have been voiced by Members of this House, or there may have been a newspaper report that seemed to have an authority to it. After all, all that we are doing here is making it easier to request information if the Secretary of State has reason to believe, without 100 per cent. proof. All that we are asking for is further information so that he can make his judgment.
I am advised that “reason to believe” is a commonly used phrase in the context of powers to request information in law. It means that the Secretary of State does not have to demonstrate that there is an issue, but simply feels it sensible to obtain further information. I hope that with that explanation, the hon. Member for Wealden will consider supporting the Government amendment.

Brian Binley: May I cheekily ask if one of those people who gives the Secretary of State information might well be the local authority? Would that be relevant to “sensible information”, or whatever the phrase is?

Malcolm Wicks: Or the local sub-post office.

Brian Binley: No, I would not go that far.

Charles Hendry: It has been closed.

Malcolm Wicks: I doubt that the local authority would have detailed information about the financial issues relating to nuclear decommissioning, but I am sure that the Secretary of State would want to take any reasonable evidence most seriously.

Hugo Swire: If it is indeed normal in terms of legal drafting to have the phrase “reason to believe” rather than “to determine”—and certainly the explanatory statement says that
“this amendment alters the threshold that the Secretary of State must meet”
and so forth—why was it in the Bill in the first place? What reasoning has led the Minister to seek to change the Bill in this way? What process did he go through? I am not being pedantic; I am just interested to know, because this is more than just a slight change. This is an emphatic change.

Malcolm Wicks: I think that as our expert lawyers and officials have considered the policy and looked again at it, they thought about how we will present it to Parliament and this Committee and they have had some second thoughts. I am guessing, however. I have not had a full description of the process, but that would be my guess. They feel that the threshold was in the incorrect place. As all we are doing is talking about the Secretary of State gathering more information, I am not sure that it is such a big deal. That is the best explanation that I can give to the hon. Gentleman.

Amendment agreed to.

Clause 49, as amended, ordered to stand part of the Bill.

Clause 50

Nuclear decommissioning: regulations and guidance

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: Clause 50 confers on the Secretary of State a power to make regulations, under the negative procedure, about the preparation, content, implementation and modification of funded decommissioning programmes and for the charging of fees. The clause enables the Secretary of State to prescribe details about how operators will be expected to prepare and implement programmes and to ensure that they have the adequate protections in place. It is analogous with provisions in the Energy Act 2004, which sets out the regime for offshore renewables decommissioning.
The clause allows regulations that make provision for how radioactive and other hazardous waste will be managed during the operation of the power station and will then be disposed of; how the power station will be decommissioned and the site cleaned up; the estimation of the costs that might be incurred during decommissioning and waste management, such as how they should be developed and about the manner in which such estimates should be verified; the financing of such estimates, including the security arrangements required; how payments from funds to pay for decommissioning and waste management are to be made; how information prescribed or of a description prescribed by regulations is to be supplied to the Secretary of State; and how fees charged by the Secretary of State are to be calculated and when they are to be paid. Regulations can also create offences where specific provisions of the regulations are contravened. Penalties created by the regulations are subject to the same limits as the offences contained in the Bill, namely a fine not exceeding £5,000 in a magistrates court, or up to two years’ imprisonment or an unlimited fine in a Crown court.
The negative procedure is considered suitable for the making of regulations under this power as the content of the regulations will be largely technical. As I have already mentioned, the provision mirrors the approach set out in the Energy Act 2004 for the decommissioning of offshore renewable installations. For example, under that Act, the Secretary of State has the power to prescribe what security should be provided and to set sanctions.
As well as enabling regulations, the clause confers on the Secretary of State a power to publish guidance about the preparation, content, modification and implementation of funded decommissioning programmes. A copy of any guidance published must be laid before Parliament. Guidance enables a principles-based approach to be adopted rather than the more prescriptive approach that is typical of regulations. The guidance is expected to set out certain baselines or minima, which the operator would be expected to meet. However, the Secretary of State recognises that operators may be able to put forward more effective or efficient methods to decommission their stations and to clean up their sites, as well as to accumulate the moneys necessary to do so. Guidance, which is based on principles, enables operators to put forward such proposals, which may be approved, provided they meet the principles.
Prior to the publication of the guidance or the making of regulations, subsection (6) requires that the Secretary of State consult interested bodies. The Government do not consider it necessary to subject the largely technical guidance to a parliamentary procedure, but the guidance will be laid in the Library. It is not the intention for the guidance to prescribe how decommissioning programmes should be formulated and carried out, but rather to allow operators the freedom to develop their own programmes, within a framework. The guidance will guide operators in preparing programmes, which may be approvable by the Secretary of State.
The approach of the clause is analogous to the existing safety and environmental licensing regime for nuclear, whereby the Health and Safety Executive and the Environment Agency issue guidance concerning the exercise of their statutory powers. The HSE issues guidance on its functions under the Nuclear Installations Act 1965 and the Environment Agency on its functions under the Radioactive Substances Act 1993.

Steve Webb: This is an important clause and raises a number of substantive issues. I hope that the Minister can paint a picture of the way that one of these funds will operate. I want to draw an analogy that he—as a former Pensions Minister—will appreciate, and it is between one of the funded decommissioning programmes and an occupational pension scheme. I hope that he will humour me with the analogy as it helps to illuminate my point. With an occupational pensions scheme, there is a set of long-lasting liabilities. The work force might be aged 21 now, but they may need pensions when they are 100. We are talking about similar time scales.
The second point is that the sums of money involved can be very substantial. When I originally heard about the funded decommissioning programmes, I thought that they would be nothing like occupational pension schemes and that we were talking about smaller amounts. However, this morning, the Minister said that the typical decommissioning cost would be £600 million and the typical disposal cost would be £300 million. Presumably, and I apologise if I have got the wrong end of the stick, one of those funds—for a single operator for a single, typical plant—might at some point need up to £900 million. If I understand correctly, an operator could also be running more than one plant, and therefore we could be talking about literally billions of pounds at peak. Clearly, there is an inflow and an outflow, which I will return to, but nevertheless we are talking about huge amounts of money.
There is a big issue about the adequacy of the funds—which we will come to in a couple of clauses—and about the control of inflow and outflow. We have been very focused on the inflow into the funds but, under clause 50, the regulations also talk about the circumstances under which a site operator can take money out of a fund. That is a critical point. Presumably, the money must be lumped in up front quite heavily, and I would like to probe the Minister further on the profile that he has in mind. I assume that a lot of money has to go in early and then, as the life of the plant progresses, the operator will start coming back to the trust fund. I want to stress that the nuclear White Paper published in January said:
“Independent funds, outside of the control of nuclear operators, should be created to accumulate and manage payments from the operator to meet the full costs”.
They are independent funds.
Let us suppose, however, that I were an operator who had been running for a while and who now had some nuclear waste that I wanted to get rid of. Would I go to the fund and say that although I had put £700 million in so far, I would now like to take something out to start meeting some of my liabilities? Is it the case that I could not take any money out until I had put in everything that I would ever want to put in? Is the process similar to a one-way valve? Is it the case that money keeps going in until it reaches an absolute maximum of all the money that will have to be spent and it can then be drawn upon? Will I not incur new liabilities, potentially increasing the amount that must go in at the same time as incurring costs that I must now spend to undertake some clean-up for the generation that I have already carried out?
As an operator, could I spend my own money—which has never gone through the trust—on clean-up and then tell the trust that it does not need to ask me to put in that gross amount as I have already spent some which I can offset against my liability? These are important questions. I cannot speak for other members of the Committee, but I do not get a sense of how the funds will work. Returning to the pension analogy, the occupational pension fund structure was supposed to do precisely that kind of thing—ring-fence money for long-term future liabilities. It failed catastrophically for 100,000 workers.

Jamie Reed: The key issue is cash flow into the operating plants that want to decommission more rapidly or meet their other liabilities with regard to fixed costs of the work force and so on. Does the hon. Gentleman agree that we need to allow the Nuclear Decommissioning Authority and other operators of nuclear facilities around the country to maximise their commercial revenue streams in order to offset costs to the taxpayer and to ensure a greater amount of surety when it comes to meeting those costs? I am talking about fuel manufacture, reprocessing and so on.

Steve Webb: I am not sure that I follow the hon. Gentleman when he talks about off-setting the costs to the taxpayer. My understanding is that there are no costs to the taxpayer if someone wants to go into business to run a nuclear power plant with no public subsidy—if the Government plan to allow them to do so. I would not see that it is the Committee’s job to help such companies offset costs that I do not think should arise in the first place; indeed, that should not be the Government policy. I hope that I have not wilfully misunderstood the hon. Gentleman, but I do not follow him on that point.
To return to my analogy, the kind of structure that we are talking about has failed catastrophically. Interestingly, the answer to the failure of occupational pension funds to meet their long-term future liability was the creation of an insurance scheme—the Pension Protection Fund—to insure against trust funds failing to meet their long-term liabilities. I have an interesting question for the Minister—it could almost be a dissertation question. We cannot create occupational pension funds that do not need insurance. If it was so easy to set up a pension fund that could be guaranteed to meet its long-term liabilities, we would have done so. However, pension funds need an insurance scheme. Why are we confident and how can we be sure that the sort of regime set up under the regulations allowed for in clause 50 will meet its future liabilities? The position is almost exactly analogous. In fact, insurance funds are much more predictable—a company pension fund is based on how many workers it has, how long they will live and how much they earn. The costs that we are talking about are much more difficult to estimate.
We have no idea of the margin of risk. The Minister has still not given us a clue about its magnitude—it could 10 per cent., 100 per cent. or 1,000 per cent. Clearly, if the margin is huge, many of my concerns would disappear, but the Minister has not been able to tell us, even to within a number of zeros, what the margin is.
In a roundabout way, I am saying that we do not have a clue. I hope that the Minister does, and that he will share his insights on the operation of the funds. To take that point further, will he say whether the money that will go into the funds is as incredibly front-loaded as I believe it will be from what I heard in the evidence sessions? As the hon. Member for Copeland said, companies will obviously make their revenues over the lifetime of the plant. However, because there is a risk, as with any commercial enterprise, of companies going to the wall, they cannot say that they can rely on their year 40 profits to meet their liabilities, because they might not get to year 40. The money must be in the trust much earlier in the process. That is my understanding of how the system will work. How front-loaded is the money? As the operation of the plant unfolds, how far are the future decommissioning and disposal costs that it accumulates front-loaded? It is simply not clear.
To be a brief friend of the nuclear industry, it will want to know before it signs on the dotted line how much of the total future liabilities of the sorts and numbers we have been talking about will be needed in year one, and how much will be required of it. The industry will immediately take a view about the profile of its costs and revenues, but what will the Government ask of the industry?
Who are the trustees? Regulations will provide for that under clause 50, but we do not know who they are. How independent will they be? Clearly, they will need expertise on nuclear liabilities but, presumably, they will be independent of the industry under the Bill. Will the Minister tell us more about who the trustees will be? If a company wants some money out of the fund to do some clean-up work and the trustees say no, what will happen?
The Government are consulting on the clause, but they will give widespread regulation-making powers, and the Committee needs to know in some detail how the Minister envisages the powers operating. What scale of process, what profile of payments and what guarantees are there? The attempt to create a similar regime in pensions failed catastrophically, so much so that an insurance scheme was needed to back it up. How can the Minister be confident that the same model, which features an arm’s length independent fund with trustees, will work when it has not worked in a similar situation?

Charles Hendry: The hon. Gentleman gave an interesting analogy. However, there is a difference between the two funds. A problem for the pension funds was that they had an unpredictable inflow. They did not employ as many people as they had done historically, so the amount of money coming in to the funds was not as great as they had expected. However, they had a commitment to how much they were going to be paying out. That is not the case with these funds; there will be a predictable inflow. There is also a difference in that there will be no significant calls on the fund while the plant is operating. The main calls will be once it has closed. All the decommissioning costs will come once the plant has ceased to operate and it will then be called upon to use the fund in that respect. The storage of nuclear waste above ground or at the site will not be covered by the fund. Only when the waste is moved into a long-term store will the fund be called upon. That is many years off. Assuming that the natural lifetime of one of the plants will be 40 or 50 years, one will be well into that process before there is a significant drain on the decommissioning fund.
It would be helpful if the Minister could clarify his thinking on how nuclear waste should appropriately be handled. The Government document published in February, the “Consultation on Funded Decommissioning Programme Guidance for New Nuclear Power Stations”, said:
“Operators will be obliged to provide safe and secure interim storage facilities that are technically capable of being maintained or replaced to last for at least 100 years from the time when waste or spent fuel is first emplaced in them.”
Is it the Minister’s view that 100 years is the appropriate length of time to store the waste above ground where one can keep an eye on it directly, or is that figure in the document because he feels that that is time that might be necessary before a final deep repository is available and the legacy waste has been put into it, making it available for new waste? Is 100 years the correct scientific period or is it based on a practical decision? If it is a practical decision, I presume that if the waste could be moved to the long-term storage facility at an earlier stage, he would be in favour of that.
Can the Minister also tell us whether he believes that on-site storage should be in tanks or—as in the United States—stored on the surface? Although that does not make a fundamental difference to our approval of the clause, it would be useful to know what he thinks about the appropriate technology and how long it takes for the waste to cool to a level at which it can be handled and dealt with more appropriately. Some say that it takes three to five years; is that his understanding?
More generally, I spoke this morning about the Swedish working model, an example that shows how the Swedes plan to dispose of nuclear waste for the longer term. Some 10,000 people a year go to see it and there is 80 per cent. local support for the approach. Has the Minister considered whether we should have something of that nature here? We are some way off identifying a suitable location, but would it at some point be appropriate to have such a working model so that people could see what it is like, be reassured about the process and have their safety concerns taken into account?

Malcolm Wicks: I am slightly loth to pursue the comparison with pensions. The hon. Gentleman and I have been in this Committee room—or a similar one—discussing the establishment of the Pension Protection Fund and I can therefore see the analogies. Of course, we acknowledge the responsibility of the then Liberal party for establishing the first national insurance regime in this country. I am not saying that the party is at fault for any difficulties that might have arisen in that fund—but why not?
Essentially, what we are talking about, in simple outline—it will obviously get more complex—is a separate fund for each nuclear installation, which will be at arm’s length from the company and will therefore be protected in terms of insolvency law, as we will discuss later. The fund cannot be touched for any other purpose. Yes, there will be trustees. One imagines that they will have expertise not altogether different from that of the people who will staff the new board that we are establishing, including finance experts and, no doubt, those with some expertise of nuclear itself, fund management and investment. The first payments to the fund will be made straight away, and the aim will be to build up the fund. From time to time, it will be reassessed to see whether payments need to be increased or, perhaps, reduced.
In broad outline, that is what we are trying to achieve, so that at the end of the day we have sufficient moneys for successful decommissioning of the structure; for putting the site back into greenfield condition, wherever that is appropriate and possible; for storage, both short term—although it could be 100 years or so—or longer term; and for the share of the geological repository.
To go through this in a little more detail, cost estimates will be regularly reassessed, and contributions to the fund modified accordingly. We believe that the costs for decommissioning are predictable, and more predictable than for pensions given its issues around longevity. However, I am not saying that the costs will be easy to predict, and I can see that there is a thesis to be written about that statement. The fund will aim for more than 100 per cent. of expected costs. On the premium, we have emphasised that we want to be as sure as we can be that the taxpayers’ interest will be protected.
Moreover, if the fund is insufficient for whatever reason, the additional securities—for example, insurance, a financial instrument or some other guarantees that the Government require—will kick in. If the fund is insufficient, the operator must make good the difference, and the provisions in the Bill aim to ensure that they are required to do that.
I have been asked whether money could be taken out of the fund only when it is full. The funded decommissioning programme must set out proposals for disbursement from the fund. That is covered in more detail by the draft guidance currently out for consultation; we are consulting on all of this. Of course, decommissioning costs, by definition, are incurred after operation ceases and when the fund is complete. Costs incurred during the operating life of the station—for example, for low-level waste disposal—will be paid for from operating expenditure. Some through-life costs, such as the construction of interim stores, will be paid for by the fund and regulated by fund managers. During decommissioning, expenditure from the fund will be monitored annually and every five years against the progress on decommissioning and waste management, to ensure that moneys are being spent on the right thing.

Charles Hendry: Will the Minister provide some clarification? He referred to facilities where waste might be stored. If waste were going to be kept for a time in a pond on the site, would the construction and maintenance of that be covered by the fund? Is that what he is saying?

Malcolm Wicks: Yes, I am saying that. I am not talking about just the final deep geological storage. I am not a technical expert and would not pretend to be, even for the sake of this Committee, but I am talking about a possible range of storage facilities, including, as the hon. Gentleman suggested, storage that could last a long time. I am not talking about 100 years, but it is clear that interim storage can be for a very long time, as we know from experience.

Brian Binley: Can the Minister give me an idea of the timing that he has in mind for ensuring that moneys are in place for decommissioning, recognising that we are talking about perhaps 50 or 60 years? The estimated mean cost for decommissioning is some £640 million, and those who say that it is higher would give a figure of almost £1 billion. When does he expect to have that sort of money in the bank and available for use?

Malcolm Wicks: In the situation that we are talking about, it is important to appreciate the time scales. We are legislating for a long-term future. I recognise all the difficulties involved; one must be sensible about it. The most optimistic suggestion seems to be that the first nuclear reactor could be up and running by 2018—some say 2017, while others, perhaps more safely, say 2020. At about that time, the first moneys would be paid into an arm’s-length fund. I do not know whether I am addressing the question.

Brian Binley: Yes.

Malcolm Wicks: Although none of us can predict, a reasonable estimate is that 40 years later a new nuclear plant might be decommissioned, and the moneys would be needed then. Some say that it could take 10 more years than that, but who knows? It is not for us to worry about that now. In relation to the fund, the aim of the fund’s trustees and the national board that we are setting up is to ensure that the funds are on course to build up the moneys required by the middle of this century. I hope that is helpful.

Anne Main: I ask for clarification but if the Minister has already answered this question, I apologise. To use the pension fund analogy that we were given, will people be allowed to take holidays from paying into the fund or make deferred payments?

Malcolm Wicks: I recall from recent social history that holidays for pension funds have created some difficulties for us. Therefore, it is not for me to say. The important thing is to ensure that the fund builds up at the right momentum for the right time period. The duty of the trustees, the national board and the Secretary of State is to ensure that that happens. The premiums could vary depending on whether they need to be increased; possibly they could be reduced. The purpose is to have adequate moneys at the end of the day. If anything, we are over-egging the pudding. We may well have more money than is required.
 Steve Webb rose—
 Charles Hendry rose—

Malcolm Wicks: Riches here are presented to me. I give way first to the hon. Member for Northavon.

Steve Webb: This is a critical issue, relating to something that the hon. Member for Wealden asked the other day. The Minister keeps saying “enough money by the end of the day”. The danger is that the end of the day might come not in 40 years’ time but in five—if, as the hon. Member for Wealden said the other day, the technology changes dramatically, or if the cost of producing nuclear energy is uncompetitive so that the nuclear industry cannot sell its power at the price for which it has budgeted and becomes insolvent. Surely the goal is for the funds to build up enough money not at the end of the day and by gradual accumulation, but quickly enough so that if something happened suddenly, the money would be there.
I am not clear about the profile. Will the liability that the fund must meet be incremental, or will most of a plant’s future viabilities be guaranteed once it is running, so a lot of the money must be put in early on? I am not clear what the Minister is saying about that.

Malcolm Wicks: If a nuclear reactor were to stop after five years, although I do not think that anyone is assuming that that will happen, various things that we have discussed—the liability on the parent company and so on—would have to come into the equation and the arithmetic. In terms of the schedule of payments, operators must put forward their proposals for the schedule of contributions to the independent fund. Of course we favour the front-loading of contributions in the early years of stations’ operating life. However, the Government might accept what might be called straight-line payments, as long as our principles are met——in other words, as long as the fund is sufficient before operations cease and as long as adequate alternative securities are in place to top up the fund should the liabilities crystallise earlier than expected in the way that the hon. Gentleman suggested. Such securities will include insurance or bonds or parent company guarantees. Payments to the fund must begin from day one of electricity generation at the station, as I hope I have emphasised. I hope that helps him a little. It looks as if it did not, but he is of that nature sometimes in his most difficult ways.

Charles Hendry: I found the explanation quite helpful, so I am grateful to the Minister. We have discussed how much decommissioning might cost, and the hon. Member for Copeland suggested the figure of £600 million, which seems to be a widely regarded figure. If a plant closed one year after operation, it would cost as much to decommission as if it ran for 50 years; the facility would have been used and the decommissioning costs would exist. The point that the hon. Member for Northavon is trying to get at is whether the £600 million will need to be in the pot on the day that it starts generating electricity, so that it is available for decommissioning if it closes down early, or whether —I think this is the answer from what the Minister just said—as long as there are other guarantees to make up the money to that level, the plant will not have to have that money in the pot to begin with, but there will have to be guarantees that the money will come from other sources.

Malcolm Wicks: We do not envisage all the money having to be in the pot on day one. We have talked about the possibility of earlier payments—front-loading. However, I said that when we felt that there was adequate security, through insurance, bonds or clear commitments from the parent company, the issue could be straight-lined. That is the important point. The important thing is that we make sure, as reasonably as possible, that the money exists from the company, from the fund, but not from the taxpayer, to ensure appropriate decommissioning.

Brian Binley: Will the Minister give way?

Malcolm Wicks: I am torn between answering earlier questions and taking new ones, but of course I shall take a new one.

Brian Binley: Just one more intervention, because I hope that it may help the Minister. One assumes that the fund will be held centrally. We are talking about more than one station, and I assume that it will be held in a central holding and there will not be any separate accounts for separate stations.

Malcolm Wicks: It is not a Government fund; it will be for the company to establish an independent fund at arm’s length run by independent trustees. As civil nuclear is rolled out, there will be a number of different funds, all separately accountable. There will be no pooling of funds or sharing of risk in that sense. The only modification to which I might need to return is when one company is on one site with more than one nuclear reactor. Indeed, I shall return to it straight away, because I am so intrigued by the question.
The hon. Gentleman will know that it is for the operator to set out in its decommissioning programme its proposed fund structure. Operators may decide to create a single fund or establish separate funds for their decommissioning, waste management and waste disposal costs. Whether a company has separate funds for each reactor or one company fund is a matter for its judgment, but there will be no pooling across different companies or across all new nuclear reactors in the land. I hope that that clarifies the situation; I am grateful for the hon. Gentleman asking me about it.
I shall emphasise those points, although I am in danger of repeating myself. It will be possible to make payments out of the fund only to meet the costs of waste management and decommissioning. I think that I have made clear the structure of the fund and our plan to ensure that there is sufficient funding. The hon. Member for Northavon asked whether money can be spent outside the fund and claimed back from it. I think that that was the burden of his question, and the answer is no. We must be very clear about what the fund is available for and what permissions are necessary to draw on it.
The hon. Member for Northavon asked me about the timing for ensuring that moneys are in place for decommissioning. It would certainly have to be in reasonable time before the date on which the station is expected to cease electricity generation to ensure that the appropriate moneys have been built up. Certainly, sufficient moneys must be in the fund, having regard to expected investment performance.

Steve Webb: I am puzzled, because the Minister is talking about bonds and insurance as alternatives to money in the fund. I think that that is an accurate understanding. In oral evidence, Dr. Higson, a departmental official, said that because many of the costs will be front-loaded, either the money would have to be in the fund or bonds or insurance would have to be in place. The implication was that that will be an alternative to having cash in the fund. If bonds and insurance are good enough, why bother with a fund at all? Why not just have bonds and insurance? What is the added value of the fund? If it has one, how can we have confidence in it, if it only builds up enough money decades into the process? I am confused.

Malcolm Wicks: Let me see if I can help the hon. Gentleman with his confusion. Centre stage is the concept of the fund, which will be at arm’s length from the company, so that it cannot draw on it. Generally, the fund will not be distributed among those calling on the company or creditors for money if the company goes bust. It is for nuclear decommissioning and waste disposal.
We are consulting on that matter, but it is early days, and want to seek expert advice and to hear from the industry and others. We are saying that a company could front-load a scheme. I do not mean that it would write a cheque for, say, £600 million on day one—it could, if it wanted to, but I doubt that it would—but that it might front-load in the early years to build up a reasonable amount of money to guard against eventualities. However, if the company felt that it would rather take a more rational and straight-lined approach, it would be allowed to do so only if other securities were available. We are discussing that with the industry. A company wishing to take a straight-lined approach could say, “Here are some bonds”, or, “Here is an insurance scheme.” That could be an alternative if the company could provide clear guarantees from the parent company. I hope that the hon. Gentleman is happy with that.
The hon. Member for Wealden asked for clarification on the length of time it takes for waste to cool before it can be disposed of and on the Government’s strategy for interim storage. Our base case, set out in the guidance, assumes that spent fuel will be stored in cooling ponds for a period following removal from the reactor, which follows best practice and advice from experts. The length of that period will depend on a number of factors and will need to satisfy the requirements of the regulators. Spent fuel will then be transferred to interim stores, the design of which must be agreed with regulators and meet UK regulatory requirements.
Finally, the hon. Member for St. Albans asked about payment holidays. Having read a note that I have received, I think that I have dealt with that. The crucial things are that the moneys build up to the necessary level and that the fund will be regularly reviewed to ensure that it is on course.

Steve Webb: I shall not sleep tonight, unless I get this straight in my head. My assertion is that company pensions went wrong and did not have enough to meet the liabilities, despite all the safeguards that we are talking about, because there were quinquennial reviews. A lot of this money will presumably be invested in the stock market, although not necessarily in a risky way. However, this is a long-term investment so presumably it will be risky. Stock markets can fall 5 per cent. in a day, so how can the Minister be confident about what will happen the moment the balloon goes up or the insolvency event happens, or whatever? There is a way of keeping an eye on things annually. However, the Minister used the word “quinquennial”. We know that when such things happen over time things can change dramatically, funds can be underfunded and the taxpayer might have to fill the gap. Since that is and was a concern in respect of pensions, why could it not happen in this case?

Malcolm Wicks: I could say, but I would not convince the hon. Gentleman, because in this case a former Pensions Minister, namely myself, is in charge of the strategy. When the hon. Gentleman was the Liberal Democrat pensions spokesman, the argument never seemed to reassure him, so I doubt whether it would reassure him in this instance.
Of course, there are sometimes significant fluctuations in the value of equities. In the United States, for example, there has been a credit crunch. I should have thought that one of the implications here—it is similar for prudent financial management—is that the trustees and the board that we are establishing would want to consider this matter in due course and ensure two things. First, they would want to see that there is the usual reasonable spread of investments, as in any fund. Secondly, to make a useful comparison, when a person is reaching the age at which they wish to retire they will ensure, wherever possible, that their moneys move into safer havens—I do not mean tax havens—such as bonds and post office or building society accounts. They would have to choose a building society carefully—[Interruption.] Actually, it is not a building society, so I should not have said that. It should have stayed a building society, arguably. Nevertheless, as people move into safer investments on retiring, I assume that 10 years before decommissioning it would be sensible for even safer investments to be made. In that way, trustees would do their best to ensure that all is well with the level of the fund.

Charles Hendry: One thing is for certain: if Robert Maxwell had been running a nuclear power station, he would not have run off with the nuclear waste, so that would have been an improvement.
I was concerned by the Minister saying that there would be either a single fund for each nuclear power plant or a joint fund to cover a range of plants. I am not clear about that: I think that it is being consulted on, rather than being set in stone. However, that worries me considerably, because if there is a fund for a group of nuclear power stations and one is sold there will have to be a difficult reconciliation of the funds’ relationships and which plant is being dealt with to ensure that a fund moves with the sale of the plant. In addition, if there were a downturn in the stock market when the first plant was due to be commissioned, more might have to be drawn out of the fund than was anticipated, which means that money that had been intended to be used for other power stations’ decommissioning may be taken out earlier. I urge the Minister to consider having just one fund per installation to provide the security that we all feel is necessary in this area.
Will the Minister clarify whether the appointment of the fund’s trustees will be wholly in the gift of the companies to whom they relate or would there have to be Government approval in respect of the trustees being suitable to carry out their tasks?

Malcolm Wicks: On the approval of the trustees, I am sure that we could not just leave it to the company, but I may be able to give the hon. Gentleman more reassurance about that. That is an important question.
In respect of whether there should be a separate fund per reactor or whether there could be one for the whole company, certainly, there must be transparency and separate reporting of funds for each station. I am advised that there is no prospect of cross-subsidy between funds set aside for each station. I imagine that we are discussing whether it is sensible, almost for administrative convenience, to have one group of trustees. We are consulting on that. I see the arguments for and against having one set of trustees rather than trustees for each nuclear reactor. I am sure that we will take the hon. Gentleman’s advice into consideration.

Question put and agreed to.

Clause 50 ordered to stand part of the Bill.

Clause 51

Funded decommissioning programmes: verification of financial matters

Amendment proposed: No. 40, in clause 51, page 44, line 29, at end insert—
‘(3) Regulations may establish a Nuclear Liabilities Financing Assurance Board (NLFAB) to provide independent scrutiny and advice on the development, approval, implementation, modification and maintenance of funded programmes for the designated technical matters mentioned in section 41(5).
(4) The NLFAB shall—
(a) be appointed by the Secretary of State;
(b) report to Parliament annually on the implementation of all funding of designated technical matters as specified in approved funded programmes;
(c) review all programmes on a five year cycle, including coverage of all designated technical matters specified in approved funded programmes, estimates for costs for all matters under section 41(5) and of security provided in connection with those costs;
(d) give advice on alternative arrangements where designated technical matters are not specified in an approved funded programme.’.—[Martin Horwood.]

Question put, that the amendment be made:—

The Committee divided: Ayes 2, Noes 13.

Question accordingly negatived.

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: Let me say a few words on the clause, although I was tempted to let it go, given the hour. The clause allows the Secretary of State to make regulations setting out the circumstances in which he may rely on advice provided by a third party to verify financial aspects of a programme. The regulations might apply when the Secretary of State is considering whether to approve a programme or when a modification to a programme that has already been proposed is being considered. The Secretary of State will not be an expert on the financial matters that might relate to a programme, so it is important that he can call on expert and independent advice when seeking to verify such matters.
In addition to the clause, and as detailed in the nuclear White Paper that we published in January, we intend to create a new independent advisory body—the nuclear liabilities financing assurance board. Aside from providing independent scrutiny and advice on the suitability of decommissioning programmes submitted by the operators of new nuclear power stations, the board will advise the Secretary of State on the financial arrangements that operators plan to put in place to cover waste management and decommissioning. Our debate just now illustrates the importance of those plans.
The board will also advise the Secretary of State regarding the regular reviews and ongoing scrutiny of funding arrangements once programmes are approved and new nuclear power stations are operational. Given the importance of providing the taxpayer with adequate protection, it is appropriate—indeed, necessary—to have an additional level of scrutiny on those financial matters, because they are fundamental to ensuring that operators meet the full costs of decommissioning and their full share of waste management costs.

Question put and agreed to.

Clause 51 ordered to stand part of the Bill.

Clause 52 ordered to stand part of the Bill.

Clause 53

Offence to fail to comply with approved programme

Charles Hendry: I beg to move amendment No. 36, in clause 53, page 45, line 22, after ‘indictment’, insert
‘in a case of dishonesty,’.

Joan Humble: With this it will be convenient to discuss the following amendments: No. 35, in clause 53, page 45, line 23, leave out ‘2’ and insert ‘5’.
No. 37, in clause 56, page 46, line 38, leave out ‘or misleading’.

Charles Hendry: This clause sets out clear rules on decommissioning and waste handling programmes. We would all agree that this could not be a more serious issue, which goes right to the heart of the debate about the safety of a new nuclear programme. Anyone breaking laws on this will be in absolute breach of the rules and regulations that Parliament has put in place to ensure that new build nuclear programmes will be as safe as possible, not to mention the breach of trust of all the assurances that would have been given. We need penalties that would reflect the seriousness of such an offence.
Amendment No. 36 would add the words
“in a case of dishonesty”
so that it would be clear that the action has been wilful and deliberate. If the action happened accidentally or inadvertently, it should be treated with a different level of severity. Amendment No. 35 relates to the severity of the penalty for such breaches of the law. Two years does not seem a very serious jail sentence for someone who has failed to comply with an approved funded decommissioning programme. Such a failure could have serious consequences for public health, and a sentence of five years’ imprisonment seems more appropriate.

John Robertson: Who does the hon. Gentleman mean by the person? Does he mean the person who inadvertently did the wrongdoing, in other words the worker, or could it be the manager or his boss who instructed him to do the job in the first place?

Charles Hendry: It is the person described in the Bill. The Bill has already referred to the person to whom the fine would apply. One assumes that it would be the person who has taken the decision and has been in a position of authority. That is one of the reasons for my earlier amendment. If someone might be considered as a worker within the facility where something had happened wrongly and could not be perceived to carry responsibility for those acts, that should be taken into account too.
The explanatory notes do not explain the level of the fine involved so perhaps the Minister could clarify that. Amendment No. 37 relates to the penalties for those who have supplied false information to the Secretary of State. It includes the term “false or misleading”. I fully understand why a person who has knowingly or recklessly supplied false information should be liable to punishment, but I am concerned about the term “misleading”. It is a very subjective term and could lead to people being convicted who have supplied information that is deemed misleading by the courts, when that was never their intention when they provided the information.

Martin Horwood: The amendments are puzzling. Amendment No. 36 introduces the phrase
“in a case of dishonesty”
into subsection (3)(b), thereby raising the threshold for a judge using prison as an option. Otherwise they will simply impose a fine. We have a problem with our prison population and there may be a feeling that the thresholds that apply to imprisonment when violence against people or property is involved or when it is unsafe for someone to be allowed outside should be enforced, but that other crimes perhaps should not allow that option.
It is interesting that the Conservative party should suggest raising the threshold for which prison is an option when there might be a serious threat to life and health from one of these decommissioning programmes not being properly carried out or when there might be a threat to Government finances from a body corporate as well as an individual acting in a deeply negligent way. It seems better, and I shall be interested to hear any further comments from the hon. Gentleman, to leave cases like this to a judge’s discretion rather than trying to prescribe it too closely in the Bill, lest we be thought to be soft on nuclear crime.
Amendment No. 35, by contrast, seems to go in the other direction and seeks to increase the prison population by sending anyone who is convicted to prison for five years not two years. Perhaps this is proposed for fear that the Government might not be able to fill all the new prison places that his hon. Friends want to build. I do not know. Again, that seems not to have an obvious justification.

Hugo Swire: Is there not an inherent contradiction in what the hon. Gentleman is saying? He accuses my hon. Friend of raising the threshold for conviction, but if he examines the next amendment he will see that my hon. Friend suggests raising the penalty. Rather than being soft, surely we are being hard?

Martin Horwood: In his slight confusion, the hon. Gentleman has reinforced my point that the amendments propose contradictory things. Amendments Nos. 36 and 37 would raise the threshold for punishment, where as amendment No. 35 would increase the punishment, so they point in opposite directions. Amendment No. 37 is mysterious in seeking to remove the offence of supplying misleading information to the Secretary of State. That could be just as damaging and dishonest as supplying false information. Why are we raising the threshold for corporate responsibility and denying judges the right to impose those kinds of penalties? We will not support the amendments.

Charles Hendry: We are trying to say that the full power of the law should not be used against people who inadvertently get into a position where there has not been wilful deceit and dishonesty. We would raise the threshold of proof that must be demonstrated in order to prosecute. Having raised the threshold, the penalties for those people should be higher. At the moment, people who have not been fundamentally dishonest may end up being prosecuted, and we want to avoid that. We are also saying that where people have wilfully and dishonestly acted in this way, two years does not seem to be enough; five years seems more appropriate.

Martin Horwood: I was about to conclude my remarks, but I am grateful to the hon. Gentleman for his intervention. He has clarified the rationale for amendment No. 35, at least. If taken with the other two amendments, and only then, that amendment makes some sense in that it is a higher punishment for a higher threshold of crime. However, I still do not see why, since in other parts of the law we punish recklessness and the supply of misleading information, we should not punish it on this occasion. I would be happy to see the clause remain as it is.

Malcolm Wicks: Let me act as a referee in these interesting discussions between the two former great parties of our nation, which I always enjoy. Rather like those on the Liberal Democrat Benches, I have wondered whether there was a connection between recent announcements and the amendment. The hon. Member for Wealden would never take the Committee for granted, but I had wondered whether, in announcing 5,000 new prison places, his colleagues were being prescient about the way in which he would sway the Committee to support this amendment for further imprisonment. He may, sadly, be disappointed. I notice that the leader of his party has recently, perfectly properly, talked about the importance of education and training programmes in prison. Perhaps he would like to table a later amendment to suggest that among the training programmes should be masters degrees in nuclear science, so that people will be properly enabled to re-enter the community.
Amendments Nos. 35 and 36 relate to clause 53, which makes it an offence to fail to comply with a programme. Amendment No. 37 relates to clause 56, which makes it an offence to supply false or misleading information. We have made it clear, both in our White Paper and in the draft guidance, what a new nuclear operator’s obligations will be in the context of meeting decommissioning and waste management costs. We believe that the framework that we are putting in place will achieve that outcome. We are therefore confident that no one will be sent to prison.
We want to be as clear as possible about what the obligations are. We are requiring that operators put robust requirements in place to meet their liabilities and underpinning the framework with criminal sanctions for non-compliance. Clause 53 makes it a criminal offence for an operator, or a person with obligations under an approved programme, not to comply with the programme, unless they prove that they exercised due diligence to avoid committing the offence.

Anne Main: I am delighted that the Minister is acting as a referee between the various opinions. Has there been any examination of the structures in place for companies that operate abroad in terms of legal proceedings against people who recklessly, knowingly or willingly mislead? Have the Government examined that and tried to put something similar in place?

Malcolm Wicks: I am not sure whether I can supply the hon. Lady with information about that. I might consult the hon. Member for Stone (Mr. Cash) to find out whether it is appropriate to use European models. We will look at that and possibly return to the matter.
The failure to comply with a programme could mean that the decommissioning and waste management costs are not fully provided for, which puts public funds at risk and therefore warrants the use of criminal sanctions. We can draw on outside expertise, but in this instance, it is for the UK Parliament to make judgments about these important things. The clause forms a crucial part of the overall regulatory structure, because it provides the key deterrent to companies and others, as appropriate, against failing to comply with their obligations under the programme.
Amendment No. 35 relates to the question of what the suitable penalty should be for someone who fails to comply with an approved funding decommissioning programme. In developing the penalties under clause 53, we have looked at other legislation and at other requirements to have in place decommissioning programmes—namely, in the oil, gas and offshore renewable sectors. It should be noted that the provisions for new nuclear power stations will complement legislation and conditions that apply to existing nuclear power stations—for example, under the Nuclear Installations Act 1965, which contains offences and penalties for contravening certain licence conditions regarding the use of a nuclear site.
Amendment No. 35 would increase the sanction from two to five years, but it would have no material impact on the incentive for an operator to comply with a programme—it might give them slightly more time to write their first novel or play, but it would not have a serious impact. Furthermore, it would take the sanctions for nuclear out of step with the decommissioning regimes that we have in place for offshore renewables and oil and gas installations.
It is important to remind the Committee that the provision aims to ensure that operators comply with their requirements to set aside adequate funding for decommissioning and waste disposal. The measure does not concern health and safety or environmental issues, which will continue to be dealt with by the Health and Safety Executive and the Environment Agency and the statutory provisions and sanctions that support those agencies.
Amendment No. 36 would reduce the effectiveness of clause 53, so that the maximum sanction only bites when the breach of a programme has been committed dishonestly. That amendment would reduce the deterrent effect of the clause and undermine the robustness of the regime as a whole. I recognise that, in conjunction with amendment No. 35, amendment No. 36 would result in the maximum penalty under clause 53 being higher than that proposed in the Bill. Taken together, those two amendments would also ensure that breaches of the programme because of carelessness or negligence would only be punishable in a magistrates court, where the fine does not exceed £5,000.
We consider that the threat of prosecution in the Crown court in such cases, with the attendant enhanced penalties, provides an additional and important deterrent. There is a risk that the proposed amendments might send out the wrong message, which is that the Government will only prosecute in one specific circumstance: dishonesty. We want to send out the message that, where there is a breach, the operator will have to demonstrate that they did everything that they could to avoid committing the breach, which is what the clause will achieve.
In the context of offences, I should also mention clause 87, which sets out that, where offences are committed by bodies corporate, directors and other officers of the operator may also be prosecuted personally where the relevant acts were committed with their consent or connivance or were attributable to their neglect. The clause creates a significant incentive on the part of the management of the operator to ensure that the company complies with the programme. It seems unnecessary and disproportionate to increase the penalty further, as proposed in amendment No. 35, in view of that additional sanction.
Amendment No. 37 is similar to amendment No. 36, as it seeks to remove the term “misleading” from clause 56. Again, I do not believe that that amendment should be accepted, as it would make it acceptable for an operator to submit information that, although not false, did not provide the full picture in relation to a particular issue—for instance, an attempt to cover up a breach in a programme. In my mind, the act of misleading is deliberate, and I am not sure that the public would be comfortable with a Minister saying that it was acceptable for a person to submit misleading information without facing sanctions. That amendment would undermine one of the foundations of the regime, which is that the Secretary of State must be able to take decisions based on full and accurate information. For that reason, it should not be accepted.
Clauses 53 and 56 are designed to send a clear message to operators about acceptable behaviours; if those behaviours are not maintained, the Government will have recourse to a sufficient sanction. If we were to accept the amendment, I believe that, overall, the Government would send out a less robust message. I therefore ask the hon. Gentleman to withdraw the amendment.

Charles Hendry: I also asked the Minister to clarify what level the fine will be, as that is not to be found in the explanatory notes. Most sections of the explanatory notes that deal with fines explain that, if a case goes to the Crown court, an unlimited fine can be imposed, but the notes on these clauses do not provide that information. It would be useful to know what the level of fine will be.
I am grateful to the Minister for the detail with which he went through the amendments in his responses. I understand that a balance must be struck. My concern is that people who had been in breach, but not been wilfully so, should not be treated in the same way as in cases that involved a much greater act of malevolence.
In amendment No. 35, we propose raising the limit from two years to five. I disagree with the Minister when he said that the difference would not put someone off. The risk of losing one’s liberty for five years rather than two—or even parole for two and a half years compared to one—is significant; people would react to that and deal with it.
The Minister said that what we propose is out of step, for example, with punishments under the oil and gas regulations. We would all feel that someone who was in breach of nuclear regulations deserved an altogether different punishment from those in breach of oil and gas regulations; there should be much greater severity, and the public would expect there to be some difference. However, I understand what he said about the punishments available elsewhere in the Bill.

Malcolm Wicks: To save me making a separate speech, I can answer the hon. Gentleman’s specific question. The fine would be unlimited. It would therefore be up to the court to determine.

Charles Hendry: I am grateful to the Minister for clarifying that point.
The final issue was about the word “misleading”. Hon. Members are aware that we should not say that a colleague had misled the House, although we can say that they had done so inadvertently. It is recognised that misleading is not always deliberate. By accident, one can sometimes say things that are misleading; it may not always be the intention. My concern is that, in this case, the word covers both deliberate and inadvertent acts.
I shall not press the amendment to a Division. However, I am keen to seek further legal advice, and we may return to the issue on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 53 ordered to stand part of the Bill.

Clause 54

Secretary of State’s power of direction

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: I shall give a brief introduction to the clause. If a person has not complied with an obligation imposed on them by the programme, or if the Secretary of State believes that that person has been engaged in unlawful conduct that he believes may affect the programme, under the powers in the clause, he can direct the person to take action to comply with the obligation or to remedy the effects of any breach. As for unlawful conduct, the person must have been convicted of a criminal act by a United Kingdom court and, if relevant, for the period of appeal to have expired—or if an appeal is made, for it to have run its course.
Before issuing a notice to direct a person, the Secretary of State must consult the interested bodies. If the person does not comply with the direction, the clause will allow the Secretary of State to apply to the High Court for an order. If the High Court decides that the person has failed to comply with the direction, it can order the person to take whatever steps are necessary to ensure that the notice is complied with. Without the clause, there would be no way of ensuring that remedial action could take place if it was considered necessary. At the same time, the constraints contained within the clause, such as the need for an appeal to have run its course, will ensure that the powers cannot be misused. I suggest that the clause stand part of the Bill.

Question put and agreed to.

Clause 54 ordered to stand part of the Bill.

Clauses 55 to 57 ordered to stand part of the Bill.

Clause 58

Power to apply this Chapter to other nuclear installations

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: This clause recognises the fact that, in due course, companies may come forward with proposals to develop other nuclear installations and facilities that will sustain and support the development of a growing nuclear energy sector. It will apply to installations or facilities that are constructed for a purpose connected with the generation of electricity, such as fuel fabrication and/or decommissioning.
The clause is about future-proofing in this framework, and it is right that we make the most of this legislative opportunity to ensure that the recourse to public funds is remote at all times. If such proposals come forward, we will seek to ensure that the developers of new installations or facilities, which are constructed for a purpose connected to the generation of electricity by nuclear power stations, cover their full decommissioning costs and any waste management costs. We believe that developers of such installations should have to operate in the comprehensive regulatory framework proposed in the Bill.
The clause will give the Secretary of State the power to extend the clauses in the Bill by order under the affirmative procedure to such installations, to ensure that the same provisions can be applied to those facilities. Such an order will be subject to the affirmative procedure, which will provide Parliament with a further opportunity to scrutinise any proposal that comes forward. That is thought to be appropriate on the basis that the provisions will give the Secretary of State the power to extend the scope of the legislation in relevant cases. I suggest that the clause stand part of the Bill.

Question put and agreed to.

Clause 58 ordered to stand part of the Bill.

Clause 59

Co-operation with other public bodies

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: This clause refers to co-operation and information sharing between the Secretary of State and the interested bodies. When information is relevant to a programme, the clause sets out the framework for the sharing of information that relates to a person—such as a site operator or persons with obligations under a programme, such as trustees, or a body corporate associated with the operator—between the Secretary of State and the interested bodies.
The clause also sets out the framework for those relevant bodies to provide assistance. It will limit the circumstances in which the Secretary of State and the regulatory bodies can share information. It will also apply if the Secretary of State is considering whether to make a modification, deciding whether or not to approve a programme under clause 41 or deciding whether to make a modification under clause 44. It will also apply where a proposal to make a modification to an already approved programme would result in a new obligation being imposed on a body corporate.
Information can only be shared between the Secretary of State and the interested bodies if the Secretary of State thinks that the information is relevant to certain statutory duties of one or more of those bodies. Likewise, the interested bodies can only share information with the Secretary of State if they think that the information is relevant to a function of the Secretary of State under this chapter. The clause will apply regardless of any statutory or other restriction that seeks to prevent a disclosure of information. Any information shared between the Secretary of State and the relevant interested bodies will be subject to the Freedom of Information Act 2000.

Hugo Swire: I see that the bodies specifically listed are the Health and Safety Executive, the Environment Agency and the Department of the Environment for Northern Ireland. Coming back to devolution, what powers, if any, will the clause give to the Secretary of State in relation to installations in Scotland, which would affect us if something were to go wrong? What is the flow of information and responsibility between the Secretary of State and the devolved Administration in Edinburgh?

Malcolm Wicks: Obviously, this is about new nuclear. The powers in the Bill will not affect Scotland, largely because the Scottish Executive, who are the planning authority for power stations of this kind, have made it clear that, at present, on planning grounds, they will not allow new nuclear to be built in Scotland. I personally hope that Scotland will one day open the way to what will be an important modern industry in the 21st century, and there may come a time when these issues will need to be revisited. However, none of the key provisions in the Bill applies to Scotland
It is important that bodies corporate associated with the operator are caught within the scope of the clause, because those involved in financing and supporting such an operator are as important to the sustainability and viability of the programme as the operator’s ability to fund it. It is therefore only right that, if one of the interested bodies had information about an associated company that might have an impact on the programme, the regulator could be required to share that information with the Secretary of State. We will work with interested bodies to draw up a memorandum of understanding that will set out how the Secretary of State and individual regulators should work together not only in sharing information, but in ensuring that the process for approving, monitoring and reviewing decommissioning programmes is understood by all those involved. That will also enable operators and persons with obligations under a programme to understand what they can expect from those parties with regulatory responsibilities.

Question put and agreed to.

Clause 59 ordered to stand part of the Bill.

Clause 60

Continuity of obligations

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: This clause will ensure that an operator can be held to any obligations under a programme, even when the original operator ceases to hold a nuclear site licence in relation to the site. This approach reflects the policy on the decommissioning of oil and gas installations under the Petroleum Act 1998, whereby the Secretary of State can pursue the licensee in relation to its obligations under an abandonment programme. The operator would only be released from its obligations when given notice by the Secretary of State. The notice may release the operator from all or only specific obligations, and it may relate to all or a specific part of the site, or to all the nuclear installations on-site or to one specified in the notice. It may also be unconditional or subject to conditions.
Where an operator wishes to relinquish ownership of a station, for example, the clause will enable the Secretary of State to require the outgoing operator to take the necessary action to ensure that the programme is up to date before releasing it from any obligation under the programme. The Secretary of State could, for example, require the existing operator to make good any shortfall in the programme, such as a funding deficit or a failure to complete the building of certain waste facilities by a certain date.
Additionally, the original operator might well wish to sell the station to another entity that does not have the necessary financial security arrangements in place and for which, if it had applied to have a programme approved, the Secretary of State would not have granted approval or would have put certain conditions in place. Using the clause, the Secretary of State could hold the original operator to certain obligations under the programme until such time as the new operator can make provision for that security.
The clause will therefore provide an important protection to ensure that recourse to public funds is remote at all times, by ensuring that the current or previous operator meets the full decommissioning costs and its full share of waste management costs. The Secretary of State’s powers to approve a programme submitted by a new operator will enable the Secretary of State to distribute responsibility for such action between the old and the new operator, as he considers appropriate.
We have underlined in the draft guidance the importance of the operator informing the Secretary of State of an impending change to the identity of the licensee—through a merger or acquisition, for example. However, the fact that consent will be needed to release the operator, in line with the clause, should encourage the relevant persons to inform the Secretary of State of the change as early as possible.
There is an argument that the clause could engage with article 1 of the first protocol of the European convention on human rights, which deals with the protection of property: although the licence, not ownership, can pass from one operator to another, the Secretary of State could, by using the clause, require the original operator to continue to make further payment to the fund. However, the Government do not believe that the clause engages with article 1. It is perfectly acceptable that such payment should be made, and that can be justified, because it is the Government’s stated policy that operators should be responsible for the decommissioning and clean-up of the station and that such payments should not come from public funds. Alternatively, it is a control-of-use provision.

Charles Hendry: I am grateful to the Minister for his preamble in setting out the way that the clause will work and the matters to which it refers.
Clearly, we want to be sure that, if a nuclear installation changes ownership, people cannot simply walk away from their responsibilities. However, how would the process of transferring those responsibilities to the new owner work? How would the Government ensure that a new company, which could be foreign-based, would take on the responsibilities of the previous owner? Simply by saying that they would not release the former owner from its duties, would the Government expect it to sort them out with the new company, or would the Government have a more direct involvement in that process?
Would the Government have powers to block sales outside the competition rules for people whom they felt that they could not hold to the same duties and responsibilities? For example, they could be companies outside the jurisdiction of the United Kingdom, where they could not be held to account in the same way as the companies that had initially sought the responsibilities and initially had the duties put on them. What would happen in those circumstances?
We have also seen that, over time, some companies simply fade away. Not a single company currently in the FTSE 100 was in it 100 years ago; every one is different. Some companies demerge, are closed down or are bought by foreign companies. In those circumstances, how do the Government intend to ensure that the obligations on a current owner are transferred effectively to someone else?
Specifically on demergers, if a conglomerate that owns the nuclear plant at the outset demerges into a number of smaller parts, what happens to the duty? The Secretary of State could not impose a duty on, for example, a French company that had fragmented or simply to decide which element of that French company should bear the responsibilities. I am interested to know how that responsibility would be enforced.

Malcolm Wicks: That is an important line of questioning, and I hope that I more than touched on some of it in my opening speech.
Operators will be released at the discretion of the Secretary of State. That essentially means that he may or may not release them. He is likely to release them when he is confident that the liabilities can be met by another organisation. If he is not confident about that, they will not be released.
The Government must be notified in good time before a change in ownership or control of the station. The Secretary of State must approve the revisions to the funded decommissioning programme. The Secretary of State would not expect to release the former owner or controller from their obligations unless and until satisfied that the arrangements under the new owner or controller are adequate. Breaching the obligation to notify the Secretary of State of the change or to submit the relevant parts of the funded decommissioning programme for approval will amount to a criminal offence.
Although the hon. Member for Northavon and myself must not keep drawing comparisons with pensions, it strikes me that there is an interesting comparison to be drawn in this matter. The Pensions Act 2004, which he and I discussed a few years ago, set up the pension regulator and the Pension Protection Fund, and it is interesting that pension liabilities are now, properly, part of the equation in company takeovers and possible mergers. One can well imagine that, when a company seeks to take over another company, nuclear liabilities will be on the balance sheet in the negotiations and in the discussion. That is perfectly proper.

Question put and agreed to.

Clause 60 ordered to stand part of the Bill.

Clause 61

Amendment of Nuclear Installations Act 1965

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: Let me briefly refer to the clause and the earlier debate on companies disappearing or demerging. I want to emphasise that, if at any time, the circumstances of an associated body with obligations under the Bill changed, that would trigger a modification to the funded decommissioning programme and would need the Secretary of State’s approval. I want to emphasise that theme, which I was developing earlier.
We are making good progress, which is a relief particularly for me, as I am cast in the role of speaker, and for hon. Members, who are cast in the role of listeners. I know that some have finished before me.
Clause 61 makes it clear that, even if the operator complies with section 11 of the Nuclear Installations Act 1965, which contains an offence of contravening the restrictions on uses of a nuclear site, they may none the less commit an offence if they fail to comply with clause 43. I remind the Committee that clause 43 will prohibit the use of a nuclear site in the absence of an approved funded decommissioning programme.
Clause 43 sets out the penalty for a person who is guilty of that offence—I do not want to trigger another death-by-hanging from the hon. Member for Wealden. The penalty on summary conviction is a fine not exceeding the statutory maximum, which is currently £5,000 in England, Wales and Northern Ireland, or, on conviction on indictment, to imprisonment for a term not exceeding two years or to a fine, or both.
Criminal sanctions will ensure that the operator of a new nuclear power station complies with the waste and decommissioning framework in the Bill. That will enable the Secretary of State to ensure that operators meet their duty to have an approved funded decommissioning programme in place. It is important to have a criminal sanction, because without a funded decommissioning programme, the power station operator might not make adequate provision for back-end liabilities. That would create the risk of taxpayers having to assist in meeting those liabilities. Operators must take full responsibility for meeting the cost of decommissioning and waste management, and the clauses in this chapter seek to ensure that the operators of any new build do so.

Question put and agreed to.

Clause 61 ordered to stand part of the Bill.

Clause 62

Meaning of “associated”

Question proposed, That the clause stand part of the Bill.

Malcolm Wicks: It seems that I must give a more detailed explanation of this clause, albeit a fairly technical one. I hope that the Committee will bear with me.
The purpose of the clause is to ensure that the Secretary of State has adequate tools at his disposal to ensure that prudent provision is made for waste and decommissioning. To that end, it is appropriate and necessary to define bodies that are associated with the operator, so that the Secretary of State can impose on them certain responsibilities. The clause sets out which bodies come within the scope of the provisions in this chapter. It also minimises the prospect of operators avoiding their obligations under the Bill—for example, through certain company structures.
Before I go any further, it is important to emphasise that the clause does not define which associated bodies are automatically fixed with liability under the programme. That depends on the exercise of the Secretary of State’s powers to approve or modify the programme. However, it does define the scope of the Secretary of State’s powers to impose obligations on associates. The clause provides that one body corporate is associated with another if one of them has a significant interest in the other, or a third company has a significant interest in both of them.
Under the definition in the Bill, company A will have a significant interest in company B if it has either a 20 per cent. interest in company B or if it has the power directly or indirectly to ensure that the affairs of company B are conducted in accordance with its wishes.
I believe that that is an appropriate threshold for the inclusion of associated companies, given the nature of nuclear waste and decommissioning. Setting the test for significant interest in that way ensures the robustness of the programme. For example, a situation might arise in which the Secretary of State formed the view that the operator might not be able to fulfil its obligations under the programme. In such a case, the clause sets out which associates of the operator could be required to ensure that some or all of the operator’s decommissioning and waste liabilities were provided for. The clause seeks to provide legal certainty to operators of new nuclear power stations in that regard by defining the associates that can be captured in that way.
The clause is also designed to ensure that prudent provision is made for the decommissioning and waste liabilities where there is no single parent. For example, a consortium might come forward with a structure in which three or more bodies each have significant influence over the operator but none holds 50 per cent. or more of the shares. Those so-called parents would all be beyond the Secretary of State’s reach if the threshold were set at 50 per cent.
I know that some concerns have been raised by the industry about the 20 per cent. threshold that we have set, so I want to use this opportunity to explain why we believe that 20 per cent. is right. It has been said that alternative thresholds of 30 or even 50 per cent. should be considered, but I have concerns about both of those figures. In the case of a single corporate body undertaking new nuclear build and owning the operator, the practical difference between a 50, 30 or 20 per cent. threshold is unlikely to be of material significance, given that the operator will be part of that group and the group will wish to exercise control over the operator at all levels.
In contrast, where a joint venture is undertaking the new nuclear build and there are several interests in the operator, the threshold is important. In establishing a consortium, one does not have to be unduly creative to structure the interests of those participating in the programme below either a 50 or 30 per cent. threshold and still ensure that those participants enjoy significant influence over the operator. If the threshold is set at the relatively high level of 50 or even 30 per cent, there is an incentive for those involved to put in place a structure that enables them to minimise the risk of being fixed with liability under the clause.
They might choose to do that even though it might add to the risk of increasing costs and complexity in both the structure and operation of the consortium arrangements. That is because the benefit derived from avoiding the potential risk exposure of obligations under a funded decommissioning programme is likely to outweigh such additional costs and operating complexity. With a 20 per cent. threshold, I would expect the complexity of putting in place and administering each consortium’s arrangements to be increased, thereby reducing the incentive.
I recognise that, at whatever level the threshold is set, there is the possibility that some people might seek to create a structure that avoids the consequences of the powers in the Bill, but I believe that setting the threshold for significant interest at 20 per cent., together with other provisions in the clause, strikes the correct and appropriate balance between the commercial interests of prospective operators and investors and the proper interests of the Government and taxpayers.
I would like to emphasise that our policy is not “nuclear at any cost.” We have discussed the potential effect of the clause with the industry and will continue to do so if needed, but I shall be clear that operators will be expected to meet their full decommissioning costs and full share of waste management costs, and the clause will provide further safeguards behind that important principle. A 20 per cent. threshold will also ensure that such shareholders want operators to take sensible decisions on waste and decommissioning costs in order to minimise the risk to their own shareholders and associates. That will put further pressure on operators properly to fund and implement their programmes.
The 20 per cent. threshold reflects existing legislative precedents, because I can anticipate the question of where the 20 per cent. comes from. For example, paragraph 20 of schedule 4A of the Companies Act 1985 refers to a significant interest over operating and financial policy where one undertaking holds 20 per cent. or more of the voting rights in another undertaking.
The clause also provides for indirect holdings to be taken into account in deciding whether a person with holdings of that nature has obligations under a programme. In this context, indirect holdings arise when one company owns a stake in a different company, which in turn has an interest in an operator of a new nuclear power station. When the holding is indirect, the Secretary of State may impose obligations on the holding company only if it has more than 50 per cent. of the shares in the company that has an interest in the nuclear operator. I believe that to be the right level.
We consider that a 20 per cent. threshold for indirect interest would bring a disproportionate number of bodies within the scope of potential liability under the programme. We have balanced that consideration carefully against the anti-avoidance risk, involving setting the threshold at 50 per cent. Furthermore, where the holding of such a company is less than 50 per cent., but it is exercising a de facto control over the operator, it will still be caught by the provisions relating to the power of a third company to ensure that the affairs of the operator are conducted in accordance with its wishes.
The threshold for control is akin to those in the decommissioning provisions on associates for bodies corporate for offshore renewables and oil and gas decommissioning installations, which apply a 50 per cent. threshold across the board. The clause applies to limited liability partnerships that are associated with the operator, with appropriate amendments, given that limited liability partnerships do not have shares. It is recognised that such organisations might have a role to play in new nuclear or as part of a corporate group involved in the area. Had we not extended the clause to include limited liability partnerships, we could have created a situation in which companies were incentivised to restructure themselves as such partnerships to avoid the consequences of the clauses in this chapter. Our approach is consistent with provisions concerning other decommissioning liabilities in the Bill.

Charles Hendry: Will the Minister explain further why the distinction in this clause is different to that in other parts of the Bill? Why has he gone for an ownership threshold of 20 per cent. in this sector, but a 50 per cent. threshold for the decommissioning of offshore renewables and oil and gas installations? Will the liability of organisations or investors relate to the size of their ownership stake, so that if a company owns more than 20 per cent. of the operator they will be liable for that exact proportion of the decommissioning costs, or will there be some other structure? If so, will he explain how that will work?
In addition, will the structure take account of how long investors or organisations have had ownership of their portion of the company? There is a great difference between the returns that an investor or a company will have if it has been an investor in a company that is operating in nuclear facilities for many years and one that has only recently become an investor. Will their liabilities be equal and based purely on their shareholding, or will other factors be taken into account?
Will the Minister also clarify what will happen if the parent company is owned by a foreign Government and is essentially the sovereign fund of another country? Will the legal duty rest on the parent company or with the Government of that country?

Steve Webb: In his introductory remarks, the Minister addressed some of the concerns that I had on reading the clause. There was a worry about the potential for organising corporate structures to avoid the knock-on liabilities. He seems to be saying that there is a trade-off in such matters. A 20 per cent. threshold implies that if six parents share the ownership of a business, they can avoid the knock-on liabilities. If I understand him correctly, he seems to be saying that six companies would have so little control or power that they would not want to do that. However, perhaps they would if they knew that they could avoid their exposure to liability. I am not quite clear about his reasoning. I understand the point that the lower the threshold is set, the less control the parents or owners have, but I do not understand why there is not still an incentive to structure the ownership in that way. Will the Minister clarify that point?
The hon. Member for Wealden made an important point about the inconsistency with clause 77 on oil and gas, for which the threshold is 50 per cent. There is clearly a different figure in this clause, and it would be interesting to know why it should be different for nuclear compared with oil and gas.
I apologise for what is probably a lack of understanding on my part, but will the Minister explain in lay terms how in this clause the 20 per cent. and 50 per cent. numbers relate to one another? One appears to relate to direct ownership and the other to indirect ownership, but indirect through what mechanism? Is it a holding company, a parent company or something else? Will the Minister clarify what the two different numbers are exactly? More to the point, why is 20 per cent. right for one and 50 per cent. right for the other? He explained what they were, but not necessarily why 50 per cent. was right for the other.

Malcolm Wicks: I hoped that in my speech I had tackled many of the issues raised. Although the hon. Member for Wealden is asking for more, as he did last week, I thought that I had clarified the position. When he reads the report of the Committee’s proceedings, he may have some questions that we can consider in another way. I thought that I had, at some length, done my best. Clearly, whether the number is 20 per cent. or 18 per cent. is a matter of judgment. I explained that we had taken something of a precedent from section 260 of the Companies Act, which refers to a participating interest as having a shareholding of at least 20 per cent. of the undertaking. At the end of the day, these will be arbitrary figures. Let me, however, deal with the issue of the parent company being based in another country.
Although the clauses do not have extraterritorial effect, the Secretary of State would not expect to approve a programme that did not make prudent provision by way of security for the costs of decommissioning, waste management and disposal. That would include a case in which the parent or associates of the operator were based overseas. At the beginning of the process, issues of extraterritoriality have to be uppermost in the minds of the Secretary of State and his advisers.
The hon. Member for Northavon asked whether there was now any incentive to structure around 20 per cent. We believe that the complexity of structuring around a 20 per cent. position would act as a disincentive. Again, I concede that these things are a matter of judgment. I will leave it there, if I may. I seriously think that there might be a way in which we can correspond on this issue if I did not make myself clear, which perhaps I did not.

Steve Webb: I am grateful for that, because the one thing that the Minister clearly did not do in his introductory remarks was say why different approaches were being taken on nuclear as distinct from oil and gas. The thresholds in an almost identical clause—clause 77—for what “associate” means are just different. What is it about oil and gas that is different from nuclear that results in different thresholds being used?

Malcolm Wicks: I think that soon we move on to issues relating to oil and gas decommissioning. Therefore, if I get the comparisons wrong, or rather if I am allowed to get them even more perfect in the future, we may be able to consider the matter in that respect. In terms of nuclear, yes, unless we are very prudent and think of all the issues, the risk to the taxpayer could be significant, but together we are going to get it right in Committee, are we not? The 20 per cent. threshold seemed to us to be right, for the reasons that I hoped I had explained.
The hon. Member for Wealden asked about a situation in which ownership was more than 20 per cent. Certainly we would expect associated companies to set up their own contractual relationships to share liability should any event occur. If we were to give a commitment such as he seeks, that could encourage avoidance. Again, we need to be careful about that, but I am aware that we might need to explore some issues further in correspondence if any doubts remain in the minds of the hon. Gentlemen when the record has been read. I appreciate that my speech was quite complex and technical.

Question put and agreed to.

Clause 62 ordered to stand part of the Bill.

Clause 63

Interpretation

Martin Horwood: I beg to move amendment No. 39, in clause 63, page 50, line 14, at end insert—
‘“disposal” for solid nuclear wastes (including nuclear materials declared as waste) means emplacement in a long term storage facility;’.
The amendment seeks to define carefully “disposal”, which is not currently in the list of words defined in clause 63. “Disposal” is important because it crops up earlier on in the Bill, in clause 41. It is one of the technical matters, along with “treatment”, “storage” and “transportation”, covered by the funded decommissioning programmes. Such technical matters, which the funded decommissioning programme must contain, include details of the steps to be taken and estimates of the costs likely to be involved. That is crucial and central to the whole programme of funded decommissioning programmes.
We might think that “disposal” was a fairly straightforward concept, which just means getting rid of the nuclear waste. However, nuclear waste does not really go away in that sense. We all know that we cannot just dispose of it in landfill—or perhaps we are dealing with a variation of landfill. I raised the matter during the evidence sessions with Dr. Roxburgh, who gave evidence for the Nuclear Decommissioning Authority. He talked about waste disposal being included along with the cost of decommissioning—
“so the complete life cycle cost would have to be recovered”—
in other words, recovered from the private operators. I asked, to be clear:
“By long-term life cycle, do you mean thousands of years in the future, potentially?”
We are talking about the complete life cycle of nuclear materials here. He replied:
“In the sense that once waste is placed in a deep geological repository, I assume that it becomes a property of the Government, or at least that it is on some sort of lease. That issue has yet to be addressed”.
So, strangely, it suddenly becomes rather unclear whether “disposal” in the terms of the Bill as currently defined means disposal by and at the expense of the private operators, or whether there is emerging some new kind of public taxpayer liability, albeit a long distance into the future. I asked Dr. Roxburgh:
“So you are expecting there to be no costs attached to that that will not be covered.”
He replied:
“You will have to ask the Government about that.”——[Official Report, Energy Public Bill Committee, 5 February 2008; c. 59, Q112-114.]
That is what I am doing right now.
Is “disposal”, in the terms of the funded decommissioning programmes, being interpreted—perhaps hopefully by the Government—as simply taking the lorry to the gate of the long-term storage repository? Or is it, as our amendment would make the Bill clearly state, talking about emplacement within it? That is critical, because the long-term storage repository is not simply a neutral facility but something that the Minister himself described as perhaps remaining uncapped and potentially accessible for as long as a century. Potentially, I suppose, if future Governments, in a century’s time, thought it was unsafe to cap it completely and make it inaccessible. They might choose to leave the repository uncapped and maintained at some minimum level long into the future. We can imagine that, on the kind of time scales that we are talking about, even a low level of maintenance could rack up quite a bill for the taxpayer. Even the light bulb in a “Keep out” sign maintained for thousands of years would add up to quite a substantial cost to the public purse. These are serious issues.
When I was in legacy fundraising for Oxfam, occasionally people left substantial gifts to Oxfam in their will. The legacies quite often came with a little proviso that we, for instance, maintained a headstone in perpetuity, because people wanted graves maintained. We are talking about a different kind of grave here, but the risk is the same. Oxfam always removed that provision, by deed of variation, from those wills, because over time those costs build up—they add up to a significant long-term storage liability, to take the analogy a bit tastelessly far. I want to extend that principle to the Bill and make it absolutely clear that the Government are not allowing the Bill, by a small loophole of definition, not to mean actual disposal in the long-term geological repository. The cost of doing that for new nuclear power stations should be recovered from the operators, as was the intention and as was the sense of the Government’s and the Opposition’s statements.
I know that the Government think that the legacy programme bears some kind of responsibility for the long-term repository, and that in some strange way it is paid for by the taxpayer on a more reasonable basis, because the legacy programme exists and we have to work out what to do with the waste. That is true, but over a very long time that will even out considerably. If the nuclear programme continues into the future, in time, the original legacy programme waste will be a minor part of the nuclear waste being disposed of. Therefore, before the Government go down the path of building new nuclear power stations, it is important to establish the principle that the cost of very long-term storage will not be borne by the taxpayer.

Malcolm Wicks: On at least two occasions I have had the opportunity to specify what costs will be paid for by the company. Let me approach the issue again. The Government are tackling the waste issue, and we recognise the importance of continuing to make progress on waste management and disposal. We set out, in the nuclear White Paper, our policy for managing and disposing of waste from new nuclear power stations. The Government believe that it is technically possible to dispose of new higher-activity radioactive waste in a geological disposal facility. That is a viable solution and the right approach for managing waste from new nuclear power stations.
The Government consider that it would be technically possible and desirable to dispose of both new and legacy waste in the same geological disposal facilities. That should be explored through the Managing Radioactive Waste Safely programme. We also consider that waste can and should be stored in safe and secure interim storage facilities until a geological disposal facility becomes available.
In the draft guidance on funded decommissioning programmes, we acknowledged that operators would need certainty over the date when they can pass the liability for their intermediate-level waste and spent fuel over to the Government for disposal—that is the nub of the question. To meet that need, we will agree a schedule with each operator for when title to and liability for waste and spent fuel will pass to the Government. That schedule will be based on a conservative view of the estimated dates of availability of disposal facilities, and it will not begin until the operator’s decommissioning programme has been completed.
I described earlier our approach to setting a fixed unit price for the disposal of intermediate-level waste and spent fuel. I highlighted that it was right and proper that the Government should bear the risk of building a geological disposal facility, since we would need to do it to dispose of our legacy waste regardless of the position on new build. New build operators will have no influence over the project to deliver the geological disposal facility, so it is right that they should not bear the open-ended risks of delay to the project.

Martin Horwood: Will the Minister give way?

Malcolm Wicks: Let me proceed, as I think that it might help the hon. Gentleman. My first few attempts have not helped him but this one may.
It is equally right and proper that operators pay for the certainty that they will get over their costs for the disposal of intermediate-level waste and spent fuel. The fixed unit price that operators pay will include a significant risk premium to cover the risk that geological disposal facilities will not be available according to the schedules agreed with operators. Operators will be expected to dispose of low-level waste promptly in the facility currently operating in west Cumbria or a successor facility. We will not set a fixed unit price for the disposal of low-level waste.
Let me emphasise something about who owns waste once it is placed in a geological repository. The Government will take title of the waste at a date or a schedule agreed with the operator at the same time as their funded decommissioning programme is approved and alongside setting a price for the waste disposal service. We expect the schedule to be aligned to the estimates for availability of disposal facilities, whatever those estimates are at the time that operators come to the Government for a firm view on a fixed price and would not begin until after the operators’ decommissioning programme had been completed. The issue is clear: up to a certain point in the process, the company must meet the full costs. That has been much of the burden of our discussion today. However, given that the waste will lie there for a very long time, there will come a time when the title to that waste and the responsibility for it passes from the company to the Government.

Martin Horwood: I am grateful to the Minister for his reply. I understood the earlier explanations about having a fixed unit cost attached to bringing the waste to the Government and effectively passing the title and the liability over to them. However, will that cover the cost of long-term storage with regard to new nuclear? The Minister suggested that the new nuclear industry should not bear any part of the cost for the repository because it would be needed for the legacy waste. I do not really accept that.
Let us imagine—and I hope that this does not happen—that the new nuclear industry continues for many years into the future. It could become the largest contributor to that geological repository in terms of the overall amount of waste being stored in it, and that will increase exponentially over time if the nuclear industry continues. Why should not the new industry contribute towards the cost of establishing that repository as it will be for their use? It will be a public subsidy in effect, as it will provide them with free, very long-term storage.
There is also the assumption that the repository will never be full and that it can never run out of capacity for new nuclear waste. At this moment, we have no idea where that repository will be or what form it will take. Therefore, we have no idea whether that will be the case or whether, at some stage in the future and having established the principle that the Government will pay for repositories, public funds will yet again be used to make a new repository entirely to cope with new nuclear waste.

Jamie Reed: I think that what I will say might help the whole Committee in its interpretation of the hon. Gentleman’s amendment. It is to do with the amount of radioactive material that will be stored from a new fleet of reactors in a future repository. All the estimates, which are credible, reliable projections, are that if we were to replace all of our current fleet with a new fleet of nuclear reactors and those reactors were to run for their lifetimes—the lifetimes in this period are assessed as 60 years, not 40 or 50—the overall waste inventory in the country would increase by less than 10 per cent. The assessment and judgment is that it would grow by approximately 8 per cent, so we would need 8 per cent. more capacity within a repository.

Martin Horwood: I am grateful to the hon. Gentleman for his technical knowledge on the issue. I assume that he talks about the volume of waste in that respect. However, surely the important thing when disposing of nuclear waste is not its volume, but its radioactivity. I am not sure that that answer is very reassuring.

Jamie Reed: In terms of cost, which is the issue that we are addressing here, the volume is the all-important thing. In terms of the repository, when we come to look at design safety, the radioactivity is not that relevant.

Martin Horwood: I am grateful to the hon. Gentleman— he reassures me to some extent. However, even 10 per cent. of the cost does not seem to be unreasonable if that turned out to be the situation. Why should not 10 per cent. of the cost of what, I presume, is a very expensive exercise in building a long-term geological repository be recovered from the nuclear industry?

Malcolm Wicks: Act one is where we accept that we have a legacy problem. I have still not worked out whether the Liberal Democrats agree that we have such a problem and have to bear the costs of that from public funds. In an era of new nuclear, we have said that, as far as reasonably possible, we will do out utmost to ensure that the full share of new nuclear waste is paid for by the companies—it is not just about the decommissioning, and attendant costs.
I want the hon. Member for Cheltenham to hear this point, as I think that it will satisfy him. Given that the geological repository will need to be larger than a repository for only the legacy of nuclear waste—although, as he says, people can exaggerate how much space is required—we have said that new build operators will pay a contribution to the fixed costs of the geological repository as well as the costs directly attributable to them. I hope that ensuring that operators pay their full costs shows our good faith, but there will come a time, if only for the sake of the important consideration of national security, when the state will take over responsibility.

Martin Horwood: My background is in business as well as charity. The Government have the only facility available and a captive market of nuclear companies wishing to dispose of their waste. Why stop at new nuclear companies when private companies are producing waste at existing nuclear power stations? Should the investors in those private companies not be expected to contribute some of the cost of long-term geological repositories?
The market price commanded should be more than enough to guarantee that any long-term costs will be more than covered. I am not clear from the technical advice given by the hon. Member for Copeland exactly how much of the cost is expected to be covered, or how the 10 per cent. will be calculated. It is difficult to imagine how we could calculate the cost far into the future. If the repository is to be maintained for 100 years or so, and the nuclear industry continues, perhaps with other nuclear power stations replacing the 60 years’ worth that we have immediate plans to build, how can we have the idea that it should somehow ultimately be a long-term Government liability? Why can we not make it a liability on private companies?
 Malcolm Wicks rose—

Martin Horwood: I shall give way to the Minister if he has news for me.

Malcolm Wicks: Is the hon. Gentleman seriously suggesting that in 3 million years’ time, companies should still have a financial liability? Despite his great background in business and charity, must not common sense come into the debate at some time?

Martin Horwood: Of course, if one is producing a product that cannot be disposed of for 3 million years, one must be very careful about the cost of doing so. That is all that I urge on the Government.
The Minister said that a risk premium might be included in the fixed unit costs for disposal, but that that was to guard against the possible unavailability of repositories. Presumably, the long-term costs of maintenance have not been factored in. Dr. Roxburgh did not answer that question for me, and nor has the Minister. What calculations have been made about the likely long-term maintenance of any uncapped storage repository, and is it intended that the costs should be entirely recovered from the unit costs, either by way of a bond or insurance premium or through some other financial mechanism? We are simply trying to establish whether the Bill contains yet another loophole to bring in a public taxpayer liability by the back door, or whether we are taking every possible step to ensure that all the long-term costs that might emerge will be met by the nuclear industry.

Joan Humble: The hon. Gentleman must indicate whether he wishes to withdraw his amendment or press it to a vote.

Martin Horwood: In the light of the lack of support from Committee members of other parties, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 2, in clause 63, page 50, line 18, at end insert ‘or Northern Ireland legislation’.—[Malcolm Wicks.]

Clause 63, as amended, ordered to stand part of the Bill.
Further consideration adjourned.—[Alison Seabeck.]

Adjourned accordingly at five minutes past Seven o’clock till Thursday 6 March at Nine o’clock.